By Saqib Iqbal Ahmed
NEW YORK (Reuters) -The dollar appreciated broadly on Thursday, a day after the Federal Reserve indicated it was in no rush to cut interest rates further this year due to uncertainties around U.S. tariffs.
The Swiss franc weakened after the Swiss National Bank lowered its policy rate to 0.25%, while the Swedish krona was soft after its central bank maintained its interest rate.
The euro was 0.46% lower against the dollar at $1.0852 after U.S. policymakers, on Wednesday, held interest rates steady and signaled two quarter-point interest rate cuts for later this year, the same median forecast as three months ago.
“We’re not going to be in any hurry to move,” Fed Chair Jerome Powell said.
Powell’s comments and the Fed statement underscored the challenge faced by policymakers as they navigate President Donald Trump’s plans to levy duties on imports from U.S. trading partners and the impact on the economy.
Data on Thursday showed the number of Americans filing new applications for unemployment benefits increased slightly last week, suggesting the labor market remained stable in March.
Recent U.S. data have helped temper worries over slowing U.S. growth that prompted the dollar to sag as much as 7% against the euro since mid-January, Jayati Bharadwaj, a global FX strategist at TD Securities, said.
“A lot of the bad news was already priced in, but none of the hard data is collapsing the way markets were fearing it would, and even the Fed is not indicating to you that they’re in a hurry to ease rates again,” she said.
“All of that is leading markets to reassess some of the bearishness that they have been pricing into the dollar,” Bharadwaj, who expects the dollar to strengthen in the near term, said.
Traders are pricing in about 63 basis points of Fed easing this year, LSEG data showed.
With President Donald Trump still expected to implement new reciprocal tariff rates against major trading partners on April 2, investors were skittish about pressing bearish bets on the dollar.
On Thursday, strategists at Morgan Stanley recommended investors close their long EUR/USD and GBP/USD positions ahead of the April 2 deadline.
“We think that it is better to consider re-entering USD shorts at more attractive levels rather than holding the positions here,” they wrote in a note.
EUROPE’S CENTRAL BANK BONANZA
The dollar’s broad strength weighed on the pound though the British currency pared some losses briefly after the Bank of England held interest rates at 4.5% and warned against assumptions that they would be cut over its next few meetings as it grappled with deep uncertainty hanging over the British and world economies.
