The U.S. dollar was mixed on Thursday morning, weaker against the euro, the Swiss franc and the Japanese yen, but stronger versus the Antipodean currencies after a slew of central bank decisions came in more hawkish than expected.
The Federal Reserve on Wednesday cut interest rates by 25 basis points to provide insurance against risks including weak global growth and resurgent trade tensions, while signaling a higher bar to further reductions in borrowing costs.
Subsequently, the Swiss National Bank, the Bank of England and the Bank of Japan all kept their policies on hold. Norges Bank increased its key policy rate, moving its rates in the opposite direction of the United States and European Union.
The dollar dipped, 0.18% lower against a basket of currencies, despite Fed Chair Jerome Powell's statement that "what we think we are facing here is a situation which can be addressed, which should be addressed, with moderate adjustments to the federal funds rate." Powell noted that the U.S. labor market was strong and inflation was likely to return to the Fed's 2% annual goal.
Central banks "came off a really bad month of August for risk and for sentiment," said Brian Daingerfield, macro strategist at RBS Securities in Stamford, Connecticut.
"But as September dawned, some of the worst U.S.-China trade escalation has pulled back, the market has been pricing out the possibility of a near-term no-deal Brexit as we prepared for elections in the UK. Some of the economic data have brightened a bit," he added.
Against the dollar, the euro was 0.13% stronger, last at $1.1043.
Elsewhere, the Japanese yen maintained earlier gains after the Bank of Japan kept interest rates on hold, last up 0.37% against the dollar. The BOJ also signaled the chance of expanding stimulus as early as its next policy meeting in October by issuing a stronger warning over the risks threatening the economy.
The central banks are generally "kind of holding their breath and holding their fire in terms of fully acknowledging that further easing could come down the road but not moving in a proactive way towards additional easing," said Daingerfield.
Against the Australian and New Zealand dollars the U.S. dollar was stronger, up 0.47% and 0.21% respectively.