NEW YORK, june 18 — The dollar maintained losses after the Federal Reserve signaled the pace of monetary policy tightening will be gradual, damping expectations for a near-term increase in interest rates. New Zealand’s currency slid on weaker-than- expected growth data, and crude oil declined.

The greenback traded at US$1.1340 (RM4.228) per euro by 8am in Tokyo, following a 0.8 per cent drop after the Fed statement. Forward contracts on Asian emerging-market currencies advanced. The kiwi slid 1 per cent. Standard & Poor’s 500 Index futures were little changed after a 0.2 per cent increase in the benchmark US gauge. Copper futures climbed before Chinese data on property prices. Oil in New York declined 0.3 per cent.

While maintaining its forecast for benchmark rates this year, the Fed tempered its projection for 2016, with Chair Janet Yellen saying it wants to see more decisive evidence of growth and that it’s likely only gradual increases in borrowing costs will be warranted. Greece’s prime minister said he’ll wear the fallout of rejecting a deal with creditors, with talks among euro-area finance ministers to take place today.

“The message out of the Fed is that the US economy is weaker than we thought in early 2015, but modest rate rises are still appropriate by the end of this year and the economy will be able to handle it,” Matthew Sherwood, head of investment markets research in Sydney at Perpetual Ltd., which manages about US$21 billion, said in an e-mail. In terms of rate hikes “we may not reach the peak until end-2017, making this cycle the smallest and longest cycle on record. The US central bank may be opting for boredom rather than boldness, and that judgment is entirely appropriate in the high debt world we live in.”

‘Gradual’ path

New forecasts issued by the Fed Open Market Committee implied two 25 basis-point rate rises this year but a shallower pace of increases next year. Yellen stressed that the date of the first rate increase is less important than the trajectory of subsequent ones. She said tightening would be “gradual,” and that the Fed wouldn’t follow a “mechanical” formula.

Three rounds of Fed bond purchases and borrowing costs near zero have propelled the S&P 500 up by more than 200 per cent during the six-year bull market.

“We are sort of in a Goldilocks economy where we don’t have to rush to make any drastic moves,” said Myles Clouston, senior director of Nasdaq Advisory Services in New York. “The Fed has the luxury to take their time and be thoughtful given that the economy is showing signs of improvement on multiple fronts. Things seem to be moving smoothly.”

Kiwi GDP

Stock gains have slowed this year, with the S&P 500 up about 2 per cent after the Fed ended its unprecedented asset- purchase program in December and signaled a rate increase could occur at any meeting. The US economy contracted in the first quarter, fueling concern that tighter policy may thwart the recovery and dent corporate profits.

The Fed met as data continued to show uneven gains in the economy. Weaker-than-forecast housing and factory reports this week followed a jump in retail sales and a surge in confidence that indicated American consumer demand is recovering amid persistent gains in the labor market.

New Zealand’s NZX 50 Index, the first major stock gauge to start trading each day in the Asia-Pacific region, slipped 0.1 per cent in early trading, set for a fifth day of losses.

The kiwi sank to as low as 69.09 US cents, close to its weakest level since 2010. Gross domestic product in the South Pacific nation grew 0.2 per cent in the first quarter, data today showed, down from 0.7 per cent in the last three months of 2014 and trailing the 0.6 per cent increase projected by economists.

Japan futures

The Bloomberg Dollar Spot Index, a gauge of the US currency against 10 major peers, was little changed after sinking 0.7 per cent today. The greenback weakened against 12 of its 16 major peers last session.

In the equity futures market, contracts on Japan’s Nikkei 225 Stock Average were down 0.3 per cent to 20,190 by 3am in Osaka, ahead of the Fed statement. Yen-denominated Nikkei 225 futures added 0.2 per cent to 20,200 in Chicago, after slipping 0.6 per cent in the previous session. The yen, which typically moves at odds with Japanese shares, was little changed for a fifth straight day, trading at 123.49 per dollar.

Qihoo 360 Technology Co, owner of China’s second-largest search engine and a security software developer, jumped 6.2 per cent in New York to its highest level since November. An investor group led by the company’s chairman and chief executive officer offered to buy out Qihoo for US$8.2 billion, fueling speculation that other deals may be in the works.

Bear market

Futures on Hong Kong’s Hang Seng Index dropped 0.3 per cent in trading before the Fed statement, while contracts on the Hang Seng China Enterprises Index, a gauge of mainland shares listed in the city, slipped 0.5 per cent. Singapore-traded FTSE China A50 Index futures lost 0.1 per cent.

Copper futures due in September gained 0.4 per cent to US$2.6180 a pound before the data on May property prices out of China, the world’s biggest consumer of industrial metals. Palladium for immediate delivery fell a sixth day, extending its descent into a bear market amid an easing of concerns over supply and signs mine output is recovering.

Gold was little changed US$1,184.96 an ounce, after rallying on the Fed’s message that the pace of tightening will likely be gradual. Higher rates drive investors to favor assets that pay interest, including new bonds, curbing the appeal of gold, which generally offers returns only through price gains.

West Texas Intermediate crude dropped to US$59.77 a barrel after ending last session little changed.

Government data today showed that US refineries unexpectedly reduced operating rates while stockpiles of crude at the nation’s largest hub rose last week.

Brent crude increased 0.3 per cent to US$63.87 today. — Bloomberg