Investing.com - The dollar traded lower against most major currencies on Wednesday even after the Federal Reserve announced plans to trim is monthly bond-buying program by $10 billion, as the monetary authority stressed that benchmark interest rates will remain low for a "considerable" period of time.
In U.S. trading on Wednesday, EUR/USD was up 0.44% at 1.3873.
The Fed said earlier it was leaving interest rates unchanged at 0.00%-0.25% though it did cut its monthly bond-buying program to $45 billion from $55 billion, citing economy recovery that should gain steam as it brushes off the fallout from rough winter weather.
"Information received since the Federal Open Market Committee met in March indicates that growth in economic activity has picked up recently, after having slowed sharply during the winter in part because of adverse weather conditions. Labor market indicators were mixed but on balance showed further improvement," the Fed said in its statement.
With the economy strengthening, the Fed decided to make a fresh cut to its monthly bond-buying program, which began in late 2012 at $85 billion a month.
"The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions. In light of the cumulative progress toward maximum employment and the improvement in the outlook for labor market conditions since the inception of the current asset purchase program, the Committee decided to make a further measured reduction in the pace of its asset purchases."
Fed asset purchases aim to spur recovery by suppressing long-term borrowing costs, which weakens the dollar.
Still, once the Fed does conclude the stimulus program, benchmark interest rates should remain at rock-bottom levels for a while, language that prevented the dollar from applauding the decision to trim its stimulus program by $10 billion a month.
"The Committee continues to anticipate, based on its assessment of these factors, that it likely will be appropriate to maintain the current target range for the federal funds rate for a considerable time after the asset purchase program ends, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored," the Fed statement read.
"The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."
Elsewhere, the Bureau of Economic Analysis reported earlier that U.S. gross domestic product grew at an annual rate of 0.1% in the first quarter, far shy of expectations for a 1.2% growth rate, though rough winter weather played a factor. The U.S. economy expanded by 2.6% in the previous quarter.
Separately, payroll processing firm ADP said non-farm private employment rose by 220,000 this month, above expectations for an increase of 210,000. March’s figure was revised up to a gain of 209,000 from a previously reported increase of 191,000.
Data also showed that the Chicago purchasing managers’ index rose to 63.0 this month from a reading of 55.9 in March. Analysts had expected the index to improve to 56.7 in April.
The dollar was down against the yen, with USD/JPY down 0.49% at 102.14 and down against the Swiss franc, with USD/CHF down 0.37% at 0.8801.
The greenback was down against the pound, with GBP/USD up 0.32% at 1.6881.
The dollar was down against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.05% at 1.0951, AUD/USD up 0.25% at 0.9291 and NZD/USD up 0.82% at 0.8622.
The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.44% at 79.54.
On Thursday, the U.S. is to publish the weekly report on initial jobless claims. At the same time, Fed Chair Janet Yellen is to speak at an event in Washington; her comments will be closely watched.
Later Thursday, the Institute of Supply Management is to release a report on manufacturing activity.