Dollar Falls Most in 10 Weeks After Fed Meeting; Krone Slumps

London (June 22)  The dollar fell the most in 10 weeks against the euro after the Federal Reserve said it will keep interest rates at almost zero for a “considerable time” and cut the outlook for economic growth.

Norway’s krone had the biggest loss versus the euro in a year after Norges Bank Governor Oeystein Olsen said he is ready to cut interest rates for the first time since March 2012. The Canadian dollar rallied as inflation rose above the central bank’s target. Global currencies volatility sank to record low. The U.S. currency weakened before a report on June 25 that is forecast to show orders for big ticket factory goods fell last month.

“The Fed’s intention is to convince the market that policy will remain accommodative and liquidity abundant for a long, long time,” Robert Lynch, a currency strategist at HSBC Holdings Plc in New York, said in an e-mail. This condition “tends to work more against the dollar than for it.”

The greenback fell 0.4 percent to 1.3600 per euro this week in New York, the biggest loss since April 11. It was little changed at 102.07 yen. The Japanese currency slipped 0.1 percent to 138.82 versus the euro.

Price Swings

JPMorgan Chase & Co.’s Global FX Volatility Index reached 5.51 percent on June 19, the least since Bloomberg started collecting the data in 1992.

The pound gained 0.3 percent to $1.7013, after rallying 1 percent last week. Bank of England Governor Mark Carney said June 12 that the first interest-rate increase “could happen sooner than markets currently expect.”

The difference in the number of wagers by hedge funds and other large speculators on an advance in the pound compared with those on a drop -- so-called net longs -- was 52,596 on June 17, the highest level since December 2007.

Source: Bloomberg