FILE PHOTO: A packet of former U.S. President Abraham Lincoln five-dollar bill currency is inspected at the Bureau of Engraving and Printing in Washington March 26, 2015. REUTERS/Gary Cameron/File Photo
THE safe-haven dollar, pared losses during the week, closing lower by 0.21% at 96.73. The dollar received a catalyst mid-week after the Federal Reserve (Fed) delivered a bleak outlook during its Federal Open Market Committee (FOMC) meeting, downplaying a V-shaped recovery in the economy with FOMC members projecting real gross domestic product (GDP) to decline by 6.5% y/y in the fourth quarter of 2020 (Q4) (median estimate) before the economy rebounds by 5% in 2021.
Besides, the FOMC members expect unemployment rate to average at 9.3% in Q4 and 6.5% by end-2021; and core-inflation at 1.0% y/y at Q4 (2021: 1.5%). Nevertheless, the Fed maintained its monetary policy with its target rate of 0.00–0.25% as expected; and forecast its policy rate to stay at zero until 2022. It pledged to continue its asset purchase programme until the economy recovers from the coronavirus pandemic. In addition, the dollar received additional impetus towards the end of the week following renewed concerns that a second wave coronavirus infection could be taking hold in some states.
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