Dollar ends mostly unchanged in wake of Fed's decision to trim interest rate
NEW YORK -- The dollar ended mostly unchanged in New York trading yesterday, rallying only briefly against the mark after the Federal Reserve announced a cut in a key short-term interest rate.</br></br>The U.S. currency rose fleetingly to an intraday high of 1.3858 marks after the central bank said it will cut its federalfunds rate 0.25 percentage point. But the dollar then swung lower, hitting an intraday low of 1.3780 marks less than 30 minutes later, as traders interpreted the Fed's move as a signal of further rate cuts ahead.</br></br>"This is a change in monetary policy," said Robert Near, a vice president, foreign-exchange trading, at the Bank of New York. "The dollar cannot rally under this scenario," he added.</br></br>In announcing a cut to 5.75% from 6% in the Fed funds rate -- the rate that banks charge one another for overnight loans -- the Fed said it moved because "inflationary pressures have receded enough." Many traders took that as a signal that the Fed is likely to cut rates further to stimulate the U.S. economy.</br></br>Traders said the market is now looking ahead to data on U.S. employment in June, set for release tomorrow, for clues on whether the Fed's cut was justified.