* Fed says to keep rates low through all of 2023
* Eurodollar futures pare back bets on rate hikes in 2022, 2023
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
(New throughout, adds Fed statement, new comment)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 17 (Reuters) - The U.S. dollar fell on Wednesday, after the Federal Reserve said it does
not expect to raise interest rates through all of 2023, contrary to market expectations.
The dollar index dropped 0.5% to 91.44 =USD after the Fed comments.
The greenback had reversed its slide in recent sessions on a surge in U.S. Treasury yields due in part
to growing expectations that the Fed may tighten rates earlier than thought on forecasts of a
faster-than-expected economic recovery.
In a statement after the Fed held interest rates steady, the U.S. central bank said it expects a rapid
jump in U.S. economic growth and inflation this year as the COVID-19 crisis winds down, and vowed to keep
its target interest rate near zero for years to come. That was in contrast to what the eurodollar futures market suggested before the Fed statement, almost
fully pricing in a rate hike by December 2022 and three increases in 2023. While the improvement in the Fed's economic outlook did not immediately change policymakers'
expectations for interest rates, the weight of opinion did shift. Seven of 18 officials now expect to raise
rates in 2023, compared to five in December.
"The Fed has materially upgraded its assessment of the U.S. economy's potential over the next several
years, rather than merely reshuffling improvements from one year to another," said Matt Weller, global head
of market research, at Gain Capital
"Though policymakers did start to price in earlier interest rate hikes, the shift was less hawkish than
many traders had feared," he added.
After the Fed statement, eurodollar futures pared back bets on an interest rate hike by December 2022.
It has priced in so far a 90% chance of tightening by March 2023 and just two hikes for the whole of that
year. EDc1
The euro rose 0.7% against the dollar to $1.1978 EUR=EBS .
Against the yen, the dollar fell 0.2% to 108.84 yen JPY=EBS .
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Currency bid prices at 3:10PM (1910 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 91.4530 91.8730 -0.45% 1.636% +92.0060 +91.3870
Euro/Dollar EUR=EBS $1.1972 $1.1903 +0.60% -2.00% +$1.1985 +$1.1887
Dollar/Yen JPY=D3 108.8400 109.0200 -0.18% +5.35% +109.3200 +108.7900
Euro/Yen EURJPY= 130.30 129.75 +0.42% +2.66% +130.4300 +129.7200
Dollar/Swiss CHF=EBS 0.9222 0.9248 -0.30% +4.22% +0.9296 +0.9218
Sterling/Dollar GBP=D3 $1.3942 $1.3895 +0.36% +2.07% +$1.3949 +$1.3853
Dollar/Canadian CAD=D3 1.2420 1.2448 -0.25% -2.49% +1.2493 +1.2411
Aussie/Dollar AUD=D3 $0.7793 $0.7746 +0.68% +1.37% +$0.7800 +$0.7700
Euro/Swiss EURCHF= 1.1041 1.1007 +0.31% +2.17% +1.1061 +1.1006
Euro/Sterling EURGBP= 0.8585 0.8567 +0.21% -3.94% +0.8604 +0.8541
NZ NZD=D3 $0.7235 $0.7190 +0.68% +0.81% +$0.7245 +$0.7155
Dollar/Dollar
Dollar/Norway NOK=D3 8.4180 8.4700 -0.65% -2.00% +8.5145 +8.4050
Euro/Norway EURNOK= 10.0811 10.0967 -0.15% -3.69% +10.1351 +10.0735
Dollar/Sweden SEK= 8.4537 8.4960 +0.15% +3.14% +8.5298 +8.4476
Euro/Sweden EURSEK= 10.1210 10.1058 +0.15% +0.44% +10.1465 +10.1140
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World FX rates https://tmsnrt.rs/2RBWI5E
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