The Federal Reserve kept rates unchanged at its June meeting with six members projecting only one hike this year, according to the 'dot plot' chart. Median expectation remain for two hikes this year. US Treasury yields slipped lower Wednesday after the Fed announcement.
Rate rise expectations have been cut significantly in recent weeks after non-farm payrolls data showed worse-than-expected jobs growth in May. Despite the sluggish data, a number of FOMC members still made relatively hawkish statements on the state of the American economy in the build up to the June meeting.
The dollar fell to a 21-month trough versus the yen on Thursday with the yen soaring after the Bank of Japan held off from increasing its monetary stimulus. USD/JPY plummeted to 103.50 as the yen surged across the board down more than 2 percent against the pound and almost 250 points against the euro.
The greenback was already been under pressure after the Fed lowered its economic growth forecasts and scaled back its rate hike projections, affirming expectations that it will have to skip tightening next month, although it still signaled it was planning to raise rates twice this year.
EUR/USD is trading at 1.1260, having jumped back above 1.1300 following the FOMC decision.
