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Dollar Mixed As Fed Leaves Rates Unchanged

The dollar was mixed against major currencies after the Federal Reserve kept benchmark U.S. interest rates steady at 5.25%, as expected, and said inflation was likely to moderate over time.

The euro edged downslightly against the dollar after the Fed statement, from $1.3225 previously. The dollar was down against the yen from 117.10 before the Fed statement.

The euro hit a record high against the yen at 155.30 after the Fed decision, according to electronic trading platform EBS.

In its statement, the Fed said expectations of lower inflation reflected the drop in energy costs. It also said U.S. economic growth has slowed over the course of the year, partly mirroring the "substantial" cooling of the housing market.

"It hasn't changed our view, which is that concerns about inflation remain," said Meg Brown, currency strategist at Brown Brothers Harriman in New York.

"The only difference is the mention of a 'substantial' slowdown in housing, and while that may be part of why the dollar is selling off, it's more about the market already being bearish dollars anyway and just selling now that the FOMC news is out of the way," she added.

Earlier in the session, the dollar received a boost after data showing the U.S. trade deficit fell to its narrowest level in October since August 2005.