* Fed signals no rush to scale back U.S. economic support
* But Fed will complete $600 billion bond buy as scheduled
* Dollar remains pressured
(Recasts, updates prices, adds detail)
NEW YORK, April 27 (Reuters) - The U.S. dollar fell against
the euro on Wednesday after the Federal Reserve said it will
end its bond-buying program in June as planned and appeared in
no rush to tighten monetary policy further.
The dollar fell to a three-year low against major
currencies on Wednesday ahead of the announcement and remained
pressured. For more see [] and [].
The spotlight now shifts to the 2:15 p.m. (1815 GMT) news
conference by Chairman Ben Bernanke, the first regularly
scheduled news briefing by a Fed chief in the central bank's
97-year history.
The Fed's super-loose interest rate policy is a source of
severe trouble for the dollar, which has lost 10 percent of its
value against a broad measure of major currencies since its
January peak.
Low rates have combined with slow growth and an alarming
budget shortfall, which led Standard & Poor's to change to
"negative" from "stable" its outlook on the United States'
prized AAA rating last week.
"Bit of dollar selling on the announcement as expected but
respecting the day's ranges"," said John McCarthy, director of
currency trading at ING Capital Markets in New York. "Nothing
too much has changed. Still waiting for Mr Bernanke's Q&A."
The euro was up 0.4 percent at $1.4695 <EUR=> after
reaching $1.4713, its highest since December 2009. The euro was
at $1.4665 prior to the Fed announcement.
Traders said Asian and Middle East sovereign accounts were
looking to buy the euro on every dip.
Market participants say a sustained break on the euro could
open the way to the psychologically key $1.50 mark.
The dollar <.DXY> skidded to a three-year low of 73.493
against a currency basket earlier in the day, down around 10
percent from its peak in January, and many traders expect the
index to fall to the all-time low, hit in July 2008, of 70.698.
It last traded down 0.2 percent at 73.713.
"There is really nothing working in favor of the dollar
right now," said Greg Anderson, G10 strategist at CitiFX in New
York. "Rate differentials are working firmly against the
dollar, we are in a risk-on environment and general dollar
sentiment is overwhelmingly bearish," he said. "The Fed would
have to turn substantially hawkish for the dollar to reverse
course."
"Really the only positive for the dollar right now is the
large level of shorts in the market," he said.
Yield differentials, however, favored the dollar over the
yen, with Japan's central bank expected to keep interest rates
low, perhaps longer than the Fed. The yen was one of the few
currencies against which the dollar managed to gain, surging
1.1 percent at 82.43 yen <JPY=>.
The yen came under pressure after S&P downgraded its
ratings outlook on Japan's sovereign debt. It warned the huge
cost of last month's devastating earthquake would hurt already
weak public finances unless the government raised taxes.
The euro jumped 1.5 percent to 121.12 yen <EURJPY=>.
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For graphic on Fed funds rate hike expectations:
http://r.reuters.com/xyz48r For graphic QE2 may flatten
yield curve, stocks http://r.reuters.com/qyw78r For graphic
QE with S&P 500 and 10-year TIPS yield
http://r.reuters.com/faq98r
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Sterling also remained neared its highest since December
2009 against the greenback after an in-line reading of
first-quarter UK growth, with investors who had sold the pound
on anticipation of a softer figure being forced to buy it back.
[]
The pound <GBP=D4> last traded at $1.6546, up 0.4 percent.
after data showed the UK economy expanded 0.5 percent in
January-March from the previous quarter.
It touched $1.6600 last week.
The Swiss franc scaled its strongest point on record
against the dollar <CHF=> while the Australian dollar shot up
to another post-float high <AUD=D4>. The aussie was floated in
December 1983.
Australian first-quarter core inflation data revived
expectations for higher Australian interest rates.
[] and []
(U.S. Treasury Team; Editing by James Dalgleish)
