The dollar index rose to as high as 98.00 as Fed Chairman Jerome Powell spoke about its decision, the highest since Oct. 17, before slipping. The index was last down 0.4% at 97.29, its lowest level in a week. The euro last changed hands at $1.1165, down 0.1%, while the greenback last traded at 108.66 yen, 0.2% lower on the day. The dollar was also pressured versus the safe-haven yen by the news that Chile has withdrawn as host of an APEC summit in November where the United States and China had been expected to take major steps toward ending a 15-month-old trade war.
Optimism that the world's largest economies would soon agree on a partial deal has boosted risk appetite this week. "The fact that Chile has cancelled the mid-November APEC Summit should not be a deal breaker for the US and China to reach a truce," said Tai Hui, Asia chief market strategist at JPMogan Asset Management in Hong Kong.
"If the two sides were genuinely willing to reach an interim deal before mid-December, when the next scheduled hike in tariff on Chinese exports is due to take place, they will find a venue to get the deal done." The Bank of Japan kept its ultra-easy monetary policy in place as expected and changed its forward guidance to more clearly signal the future chance of a rate cut. Currency markets hardly budged after the BOJ decision.
Sterling edged up after British Prime Minister Boris Johnson won parliamentary approval on Wednesday to hold a general election in December, though moves were limited as large currency options expiring this week curbed volatility. The pound was trading at $1.2927, 0.2% higher on the day. The Australian and New Zealand dollars firmed as investors scaled back wagers on local interest rate cuts after the Fed indicated it might be pausing in its easing campaign. The Aussie gained as much as 0.4% to mark a three-month top of $0.6930, while the kiwi dollar popped up 0.7% to $0.6433, its highest in more than a week.