Dollar up vs. euro, yen after Fed cut
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dollar, euro, feds, rate cuts March 18th, 2008Less is more for investors betting on dollar gains
SAN FRANCISCO (MarketWatch) — The dollar rallied against the yen and the euro after initially seesawing against major rivals Tuesday, after the U.S. Federal Reserve’s decision to cut to its benchmark federal funds rate on the lower end of expectations.
The Fed cut its key interest rate by three-quarters of one percentage point on Tuesday, taking its federal funds rate target down to 2.25%, the lowest since December 2004. Many investors and economists had expected a full percentage-point cut. See full story.
Lower interest rates usually pressure currencies because they erode the returns on assets denominated in those currencies, so a smaller-than-expected cut eventually gave way to dollar short-covering.
Tags: dollar, euro, feds, rate cuts
