By Gina Lee

Investing.com – The dollar was up on Thursday morning in Asia, losing ground against the euro and sterling, as the latest U.S. Federal Reserve policy decision began asset tapering but kept interest rates steady.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.15% to X by 93.998 PM ET (X AM GMT).

The USD/JPY pair edged up 0.20% to 114.20.

The AUD/USD pair edged up 0.12% to 0.7454 while the NZD/USD pair inched down 0.06% to 0.7154.

The USD/CNY pair edged down 0.19% to 6.3941 and the GBP/USD pair edged down 0.18% to 1.3659.

The Fed handed down its decision on Wednesday, where it announced it would begin asset tapering in November. However, Fed Chairman Jerome Powell added that the central bank would be "patient" on the timetable for interest rate hikes.

The pound extended Wednesday's 0.51% gain after the Fed decision, recovering from Tuesday's two-week low of $1.3603. The euro rose to $1.161, also rallying on Wednesday after the decision to gain 0.29% that day.

The focus is now on how long the Fed defer interest rate rises, with concerns that high inflation could last longer than the Fed had initially projected.

"Powell stressed that this Fed meeting was much more about quantitative easing than interest rates but this will be the last meeting in which that reasoning will hold. From here on, future Fed meetings are going to return the focus back to the Fed’s interest rate strategy and tactics," Janus Henderson Investors head of multi-asset Paul O’Connor told Reuters.

The Bank of England (BOE) will hand down its policy decision later on in the day, the last in a slew of central bank policy decisions.

BOE could be the first key central bank to raise interest rates since the onset of the COVID-19 pandemic. However, there is less consensus among investors about the BOE decision.

In Asia Pacific, the Australian dollar clawed back some of its losses from a 1.2% drop on Tuesday, after the Reserve Bank of Australia kept interest rates steady when it handed down its policy decision.

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