* Dollar falls broadly after Fed cuts 2017, 2018 rate view
* Dollar index hits one-week low
* Oil-linked currencies up as crude prices gain
* Norwegian crown up 2 pct as central bank holds rates
(Updates to U.S. trading, new throughout)
By Dion Rabouin
NEW YORK, Sept 22 The dollar fell to its lowest
in a week against a basket of major currencies on Thursday as
investors sold the greenback following a writedown of
longer-term interest rate expectations from the Federal Reserve.
The Fed left short-term interest rates unchanged at the
conclusion of its policy meeting on Wednesday and despite the
dissent of three members, who voted in favor of raising rates,
the Federal Open Markets Committee largely reduced the number of
rate hikes they foresee in 2017 and 2018.
That knocked the dollar almost across the board as investors
reduced their expectations for U.S. interest rates.
"On one hand the Fed looks like it will raise rates in
December ... and on the surface that's somewhat hawkish and
positive for the dollar, but at the same time the Fed lowered
its longer-term projected path of interest rates," said Omer
Esiner, chief market analyst at Commonwealth Foreign Exchange in
"It's hard to get too excited about the dollar when the Fed
is lowering its projected path of rate hikes into the future."
Higher interest rates make currencies more attractive to
The dollar index dropped 0.5 percent to 95.189.
The euro rose to its highest against the dollar in
nearly a week, gaining 0.6 percent to $1.1250, while the
greenback hit its lowest in two weeks against the Swiss franc
, falling to 0.9663 franc.
With oil prices rising for the second straight day thanks in
part to a surprisingly large drop in U.S. crude inventories,
oil-linked currencies like the Canadian dollar, Colombian
peso and Russian rouble all gained against the
The dollar hit its lowest against the loonie and peso in
nearly two weeks and its lowest against the rouble since Aug.
The major mover against the dollar, however, was the
Norwegian crown, which rose more than 2 percent after
Norway's central bank left its main interest rate unchanged and
suggested further rate cuts may not be needed because of a
pickup in the economy.
"The Norges Bank had a meeting today and they sounded much
less dovish than what the market had expected," said Charles
St-Arnaud, senior strategist and economist at Nomura Securities
International in London.
That was despite reports on Wednesday that the country's
unemployment rate rose to its highest level in 20 years.
(Reporting by Dion Rabouin; Editing by Meredith Mazzilli)