NEW YORK: The dollar tumbled against major currencies on Thursday, falling around 1 percent against the euro, yen and Swiss franc, as markets sold off in reaction to Wednesday's dovish statement from the Federal Reserve.
The dollar was notably volatile against the yen, moving sharply lower before snapping back, rising a full yen during the U.S. session from a level weaker than 111. However, the greenback weakened once again and was last down 1 percent at 111.51.
There was market chatter that the Bank of Japan had been speaking to dealers about activity in the yen, but several traders contacted by Reuters said they did not have any indication the central bank was intervening.
"It would be a bit strange for the BoJ to start intervening," said Charles St-Arnaud, senior strategist and economist at Nomura International in London. "You're just a month after the G20 where (Japan) pledged not to use competitive devaluation to their advantage and to let market forces determine the currency."
The dollar had fallen to a low of 110.65 yen, its weakest since October 2014. It bounced back to 111.70 yen in a shift that took less than a minute and moved in choppy trading for most of the morning.
The fleeting snap back of the dollar against the yen resembled similar moves from the dollar against several other currencies in early trading, drawing support from positive data from the Philadelphia Federal Reserve, where its regional business index beat estimates by more than 10 points, and by U.S. initial jobless claims that were lower than analysts had predicted.
The dollar index, which measures the greenback against six major world currencies, also trimmed losses in response to Thursday's data, moving from its lowest level since October, but its rally was short-lived. It was last down 1.1 percent at 94.823.
"The reversal in yen is not very much different in size than the reversal in the Canadian dollar, euro, Aussie, etc," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.
"There have been rumors in the market that the BoJ has or perhaps would intervene, but I don't see any evidence of that," he added.
Sterling, meanwhile, made the biggest gains against the dollar on Thursday. Bolstered by the Bank of England's decision to keep rates unchanged, the pound was last up 1.3 percent to $1.4445.
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