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* Fed sticks to dovish stance
* Fed's Powell says not the time for taper talk
* Powell says current inflation not enough to prompt rate hike
* Ethereum hits record high
* Graphic: World FX rates tmsnrt.rs/2RBWI5E
(Recasts lead paragraph, adds comment, ethereum, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, April 28 (Reuters) - The dollar slid on Wednesday after the Federal Reserve doused hopes of an
early reduction in its monthly bond purchases and struck an overall cautious tone about the outlook on
inflation and the overall economy.
The Fed, as expected, held interest rates unchanged but did acknowledge the improvement in the U.S.
Fed Chair Jerome Powell, in remarks after the central bank statement, said it was not the time to talk
about tapering its asset purchases. That triggered a further slide in the dollar.
The greenback had rallied in conjunction with the rise in U.S. Treasury yields on the view that a
successful vaccination program and strengthening economic data would prompt the Fed to talk about reducing
its bond purchases sooner rather than later.
"Powell threw cold water on talking about tapering," and that has been the main driver in the move lower
in the dollar, said Ron Simpson, managing director, global currency analysis at Action Economics in Tampa,
U.S. 10-year yields slipped to 1.618% in the wake of Powell's comments.
"The path of the economy will depend significantly on the course of the virus, including progress on
vaccinations," the Fed said in its statement. "The ongoing public health crisis continues to weigh on the
economy and risks to the economic outlook remain."
In late afternoon trading, the dollar fell 0.3% to 90.576.
The euro rose 0.3% to $1.2126, while the dollar slipped 0.1% against the Japanese currency to
"As it stands, there is nothing here to change our view that the Fed won't begin to taper its monthly
asset purchases until the start of next year and won't begin to raise interest rates until late 2023," said
Paul Ashworth, chief U.S. economist at Capital Economics, in a note sent after the Fed statement.
Powell also reiterated that the rise in inflation this year was transitory and that would not meet the
standard for raising interest rates.
Still, the eurodollar and fed funds markets, which track short-term interest rate expectations,
on Wednesday have fully priced Fed tightening in March 2023. Eurodollar futures also show a more than
90% chance of a Fed hike starting by December 2022.
That was the same expectation before the Fed statement.
"At some point, U.S. inflation will pick up and Powell was very clear about that," said Action
Economics' Simpson. "But I don't think it's going to happen overnight and when it does, that's the time when
Treasury yields will be moving higher again," and the dollar will move higher with them.
In the cryptocurrency market, ethereum hit a fresh record high of 2,747.01 on Wednesday in
the wake of news that the European Investment Bank has raised 100 million euros ($121 million) from a
two-year digital bond sale on the public ethereum blockchain network.
Ethereum is the second largest cryptocurrency in terms of market capitalization, currently at $316.5
billion, according to data tracker CoinGecko.com.
Currency bid prices at 4:14PM (2014 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Dollar index 90.5960 90.8970 -0.32% 0.683% +91.1270 +90.5510
Euro/Dollar $1.2125 $1.2093 +0.26% -0.77% +$1.2135 +$1.2056
Dollar/Yen 108.6050 108.7300 -0.13% +5.10% +109.0750 +108.5750
Euro/Yen 131.68 131.48 +0.15% +3.75% +131.8100 +131.4000
Dollar/Swiss 0.9092 0.9137 -0.53% +2.73% +0.9181 +0.9088
Sterling/Dollar $1.3942 $1.3910 +0.27% +2.09% +$1.3950 +$1.3863
Dollar/Canadian 1.2319 1.2402 -0.66% -3.25% +1.2418 +1.2311
Aussie/Dollar $0.7790 $0.7768 +0.29% +1.27% +$0.7801 +$0.7726
Euro/Swiss 1.1023 1.1045 -0.20% +2.00% +1.1075 +1.1022
Euro/Sterling 0.8694 0.8686 +0.09% -2.71% +0.8707 +0.8686
NZ $0.7263 $0.7209 +0.78% +1.17% +$0.7267 +$0.7189
Dollar/Norway 8.1900 8.2790 -1.02% -4.57% +8.2965 +8.1700
Euro/Norway 9.9304 10.0007 -0.70% -5.13% +10.0255 +9.9055
Dollar/Sweden 8.3416 8.3743 -0.03% +1.77% +8.3980 +8.3350
Euro/Sweden 10.1146 10.1180 -0.03% +0.38% +10.1340 +10.1060
(Reporting by Gertrude Chavez-Dreyfuss; Editing by Andrea Ricci and Sonya Hepinstall)