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Dollar keeps lower after weak Q1 US growth

The dollar held lower against most other major currencies on Wednesday after the Federal Reserve's anticipated decision to keep tapering its stimulus and data showing US first-quarter economic growth stalled.

NEW YORK: The dollar held lower against most other major currencies on Wednesday after the Federal Reserve's anticipated decision to keep tapering its stimulus and data showing US first-quarter economic growth stalled.

The Fed announced it would cut another US$10 billion from its asset-purchase stimulus programme, bringing spending down to US$45 billion a month.

"The as-expected statement largely mirrored the Fed's last communique and as such, had little meaningful impact on stocks, bonds or the dollar," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange.

The Fed decision came hours after the Commerce Department reported US economic growth slowed to a glacial 0.1 percent growth rate in the first three months of the year, from a 2.6 percent pace in the fourth quarter of 2013.

The slowdown was much sharper than expected, but recent economic data have largely signalled an improving economy that should keep the Fed on track to wind down its asset purchase program around the end of this year, Esiner said.

"Notably, the Fed said that growth has picked up after having slowed sharply during the winter," he said.

Across the Atlantic, the euro benefited from a rise in eurozone inflation in April, to an annual rate of 0.7 percent, that tamped down fears of low inflation in the 18-nation currency bloc.

The inflation result "does not provide a clear-cut case for European Central Bank easing at next week's policy meeting," said Nick Bennenbroek, head of currency strategy at Wells Fargo Securities.

Meanwhile, the Bank of Japan left its monetary policy unchanged but lowered the country's growth projections, fuelling speculation it will expand its massive stimulus drive.

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