• Fed leaves interest rates unchanged, remains upbeat on economy
The Federal Reserve held interest rates steady on Wednesday in its first meeting since President Donald Trump took office, but painted a relatively upbeat picture of the U.S. economy that suggested it was on track to tighten monetary policy this year.
At the end of its two-day meeting on Wednesday, the Fed said it expected that economic activity would expand at a "moderate pace," and the labor market strengthen "somewhat further."
The U.S. central bank, which has forecast three rate hikes this year, kept its benchmark overnight interest rate unchanged in a range of 0.50 percent to 0.75 percent. The Fed increased borrowing costs in December.
The U.S. central bank said job gains remained solid, inflation had increased and economic confidence was rising, although it gave no firm signal on the timing of its next rate move.
Fed policymakers are still awaiting clarity on the possible impact of Trump's economic policies.
The Fed also highlighted that the unemployment rate, currently at 4.7 percent, was still hovering near its recent low.
• Financial markets were little changed after the rate decision, while investors were still expecting the next rate increase to occur in June, according to Fed funds futures data compiled by the CME Group.
• The U.S. dollar trimmed gains against a basket of major rivals on Wednesday on disappointment that the Federal Reserve did not take a more hawkish stance on interest rate increases, though stronger-than-expected U.S. economic data buoyed the greenback.
The dollar index, which measures the greenback against a basket of six major currencies, trimmed about 0.3percent of its gains on the day after the Fed statement and was last up just 0.2 percent at 99.669.
The dollar was last up 0.4 percent against the yen at 113.23 yen, while the euro was down 0.3 percent against the dollar at $1.0764. The dollar earlier gained 1 percent against the yen to a session high of 113.95 yen.
• U.S. factory activity accelerated to more than a two-year high in January amid sustained gains in new orders and raw material costs, pointing to a recovery in manufacturing as domestic demand strengthens and the drag from low oil prices ebbs.
• Other data on Wednesday showed private employers boosted hiring last month. While construction spending slipped in December, the underlying trend remained strong. The signs of strength in the economy at the start of the year were acknowledged by the Federal Reserve's policy-setting committee.
• Crude futures rallied late Wednesday, jumping more than $1 a barrel after briefly trading lower on a bearish U.S. government report early in the day. Oil markets have been trapped in a range as traders wait to see whether OPEC production cuts can outweigh U.S. supply growth.
• Oil futures pared gains immediately after weekly U.S. supply data showed a much bigger build than expected, but prices rebounded.
• Brent crude LCOc1 settled up $1.22 a barrel at $56.80. U.S. crude CLc1 settled up $1.07 a barrel at $53.88.
Reference: Reuters
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