Euro-dollar rate flat after Fed meeting

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Euro-dollar rate flat after Fed meeting

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European private sector business activity sent euro tumbling but it rebounded after the Fed meeting.

25 October,2012 04:24 am

Another fall in European private sector business activity sent the euro tumbling early Wednesday but it rebounded after the US Federal Reserve said its easy money stance would remain in place.The euro fell as low as $1.2921 before recovering to $1.2972 at 2100 GMT, barely changed from late Tuesday.The dollar slipped to 79.79 yen from 79.84, while the euro fell to 103.49 yen from 103.64.The fall in the Markit research firms Composite Purchasing Managers Index (PMI), a survey of 5,000 eurozone businesses, sent the euro sharply lower early in the day.The eurozone PMI fell to a 40 month low of 45.8 points in October from 46.1 in September, signalling that businesses were contracting at a faster pace than in recent months.That bearish signal for the euro was offset by the Feds policy statement at the end of a two-day meeting.The US central bank gave only minimal acknowledgment of any improvements in the economy and stressed that it remains vulnerable with slowing business investment and high unemployment.The Fed kept its benchmark interest rate locked at 0 to 0.25 percent as expected, and reiterated it expected to keep the rate at a very low level at least through mid-2015.It said its QE3 and Operation Twist bond purchases, worth $85 billion a month, would stay in place and that it would maintain its broad policy to hold down interest rates for a considerable time after the economic recovery strengthens.The dollar rose to 0.9336 Swiss francs from 0.9327 francs; the British pound gained to $1.6041 from $1.5948.