SINGAPORE, (Reuters):
THE UNITED dollar struck a one-month low against the euro yesterday and stocks were mixed after the Federal Reserve promised a "measured" approach to monetary policy, cooling talk that it would raise United States rates sharply.
The 10-year U.S. Treasury yield remained near an eight-month high after bond prices fell on Tuesday, when the Fed left interest rates unchanged but suggested it was nearer an increase.
Oil prices held near their highest close in more than 13 years after rising on concerns that violence in Saudi Arabia and Iraq could disrupt supplies. Gold hit a one-week high.
The Fed said after a policy meeting that price risks were balanced and it would move at a "measured" pace, tempering hopes among dollar holders that a sharp rise in rates was in the works.
That pulled the dollar lower in U.S. trade and it eased further in Asia, hitting a one-month low of around US$1.2140 against the euro. Against the yen, the dollar was steady at 109.35 yen.
ISSUE
"The issue becomes one of the speed of the increases," said Mark Tierney, strategist at Australia's Macquarie Bank.
He tipped a June start for Fed. hikes, provided U.S. employment grows in April and May, and said the Fed. funds rate could increase from one per cent to 2.5 per cent over a year.
In New York, the Dow Jones industrial average hardly moved, while the Nasdaq Composite Index advanced 0.6 per cent.
U.S. Treasury bond prices fell on the Fed.'s hint that rates would rise and wariness ahead of tomorrow's April jobs report, expected to show another month of employment gains.
Hefty orders for factory goods in March were seen as proof of a resurging economy and added to the pressure on the Fed to boost rates, perhaps as soon as this summer.
The benchmark 10-year note slid 16/32 to 95-18/32, pushing its yield up to 4.57 per cent matching last week's eight-month high and well above Monday's closing yield of 4.50 per cent. The price eased slightly in Asia.
U.S. oil dipped just 0.2 per cent after settling in New York at its highest price in 13 years, rattled by an attack on Saturday at a petrochemicals complex in Saudi Arabia, the world's largest oil exporter.
Crude eased to US$38.91 after settling up two per cent in New York at US$38.98 a barrel, the highest close since October 12, 1990, two months after Iraq invaded Kuwait. Oil rose as high as US$39.99 in intraday trade during February 2003, in the run-up to the latest Iraq war.
Gold rose to a one-week high of US$394 an ounce from US$391.10 in New York.
