Investing.com - The dollar was trading at one-week highs on Thursday, after the Federal Reserve indicated the possibility of an additional rise in interest rates this year and announced the winding down of its stimulus program.
As expected, the Fed left interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday.
However, the central bank indicated that one more interest rate hike is likely this year, even though it reduced its outlook for inflation this year from 1.7% to 1.5%, and from 2% to 1.9% in 2018.
The Fed also said it will begin to unwind its $4.5 trillion balance sheet in October. Most assets consist of the Treasurys and mortgage-backed securities the bank acquired under its quantitative easing program.
EUR/USD was up 0.16% at 1.1912, while GBP/USD held steady at 1.3495 after the UK Office for National Statistics reported that public sector net borrowing increased by £5.09 billion last month, compared to expectations for an increase of £6.50 billion.
Elsewhere, the yen was lower, with USD/JPY up 0.11% at 112.35, its highest since July 18, while USD/CHF rose 0.26% to trade at 0.9722.
Earlier Thursday, the Bank of Japan also left its monetary policy unchanged, in line with market expectations. However, a dovish new board member was said to have opposed the decision.
The Australian and New Zealand dollars were weaker, with AUD/USD down 0.96% at 0.7954 and with NZD/USD dropping 0.45% to 0.7326.
Earlier Thursday, Statistics New Zealand reported that gross domestic product expanded by 0.8% in the second quarter, in line with expectations. The previous quarter's growth rate was upwardly revised from 0.5% to 0.6%.
Year-on-year, New Zealand's economy grew 2.5% in the last quarter, as expected.
Meanwhile, USD/CAD eased up 0.09% to 1.2336, its highest since September 6.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 92.20 by 05:15 a.m. ET (09:15 GMT), the highest since September 14.