The dollar fell sharply against the yen but rose versus the euro after as expected the Fed cut the US interest rate by 0.25 per cent. US stocks took a bit of a hammering following the statement accompanying the release which didn't reassure investors that more cuts were coming.
GBP
The pound lost some ground versus the dollar after the interest rate cut in the US but pegged back those losses. It is still, though, relative to the last couple of years, trading at pretty low levels against the euro.
USD
The FOMC as anticipated cut its benchmark lending rate by 0.25 per cent to 4.25 per cent while also lowering the rate it lends directly to banks by 0.25 per cent to 4.75 per cent. Given the reaction by the US equity exchanges, markets were hoping for either a 0.5 per cent decrease or a more dovish tone and language from the Fed.
EUR
The euro lost ground versus the dollar following the interest rate cut in the US as investors viewed the news as positive for the US economy in the long term. It also lost ground against the yen, as a drop in German investor confidence to the lowest level in almost 15 years, signalled mounting global credit costs are affecting the outlook for the eurozone's economic growth.
JPY
A substantial tumble in the stock markets as well as a large sell-off of carry trades following the Fed's interest rate cut, meant that the yen was the largest gainer. However, much of these gains disappeared as many finance companies in Japan are apparently planning on selling much of their yen supplies.
Commercial Foreign Exchange Travelex Malta, freephone: 800 733 22, www.travelex.com/mt/