The Federal Reserve’s announcement on Wednesday that it will not raise interest rates this year sent traders swiftly away from the U.S. dollar and offered support to Asian stock markets. In addition to crashing expectations for additional interest rate hikes this year, the Fed also lowered its forecasts for economic growth and inflation, and raised its expectations for higher employment, painting a dovish picture of the U.S. economy. Lastly, the Fed also announced that it will stop running down its balance sheet in September, earlier than expected.
The dollar was trading lower against all of its trading partners during Thursday’s Asian trading session. The greenback eased 0.14 percent against the yen, falling to 110.54. The British pound was up 0.14 percent against the dollar despite its own problems, to trade at $1.3214. The euro was 0.07 percent higher against the dollar, while the Australian dollar saw the steepest gains, up 0.44 percent to $0.7145 as of 2:38 p.m. HK/SIN.
Gold prices soared, trading up 1.26 percent in the mid-afternoon, to $1,318.10 per ounce, down slightly from near one-month highs hit earlier in the session. The precious metal gained on concerns of a global economic slowdown which sent traders into the arms of the safe-haven asset. The lower dollar added to gold’s appeal.
Asia’s benchmark stock indexes were all trading higher on Thursday afternoon, following the Fed’s decision and a mixed close on Wall Street. The Shanghai Composite was up 0.89 percent and the Shenzhen Composite was up 1.16 percent, both making up for losses earlier in the week. Hong Kong’s Hang Seng Index was up 0.17 percent and South Korea’s Kospi was 0.38 percent higher. Japan’s Nikkei 225 was closed for a national holiday.