Dollar rallies as Fed continues tapering

The US dollar rallied against major currencies Wednesday after the Federal Reserve cut the quantitative easing program by another 10 billion dollars.

The spot rate of dollar index, which tracks the greenback against six major currencies, jumped to 80.09 following the announcement but gradually moved down to 79.99 in late New York trading.

After a two-day policy meeting, Fed policymakers reduced its monthly bond purchases by 10 billion dollars to 55 billion dollars, and this is the third consecutive cut of the monetary stimulus.

The Fed also said if incoming information supports its expectation of ongoing improvement in labor market conditions and inflation moves toward its longer-run objective, it will likely reduce the pace of asset purchases in further measured steps at future meetings.

Moreover, the Fed reaffirmed its view that a highly accommodative stance of monetary policy remains appropriate to support labor market and price stability and that it updated its forward guidance to drop the 6.5 percent unemployment rate as threshold for considering hiking interest rates.

In late New York trading, the euro slipped to 1.3828 dollars from 1.3929 dollars in the previous session, and the British pound decreased to 1.6532 dollars from 1.6586 dollars. The Australian dollar dropped to 0.9048 dollar from 0.9125 dollar.

The dollar bought 102.49 Japanese yen, higher than 101.53 yen of the previous session. The greenback moved up to 0.8821 Swiss franc from 0.8736 Swiss franc, and went up to 1.1236 Canadian dollars from 1.1143 Canadian dollars.