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Dollar Edges Off One-Month High; Traders Digest Fed Statement

ForexSep 23, 2021 03:14AM ET
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© Reuters.

By Peter Nurse

Investing.com - The dollar eased lower in early European trade Thursday, retreating from a one-month high as traders digested the previous session’s Federal Reserve meeting and what it means for future monetary policy.

At 2:55 AM ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% lower at 93.332, slipping from a one-month high of 93.526.

EUR/USD rose 0.2% to 1.1711, bouncing off a one-month low, USD/JPY rose 0.1% to 109.88, while the risk sensitive AUD/USD fell 0.1% to 0.7241, near multi-week lows.

The Fed left policy settings unchanged on Wednesday, as expected, and also decided against announcing the beginning of asset purchase tapering. However, the central bank said "a moderation in the pace of asset purchases may soon be warranted", with Chairman Jerome Powell adding that board members believed tapering could conclude around mid-2022, opening the way for interest rate hikes after that.

“The key story is the dot plot for interest rates. The FOMC is now split 9-9 on whether rates will be raised next year,” said analysts at ING, in a note. “Note too that there is only one FOMC member who doesn’t expect a rate rise by the end of 2023, a massive change from just six months ago.”

Additionally, GBP/USD rose 0.2% to 1.3654 with traders positioning for a potential surprise at the Bank of England’s latest policy-setting meeting later in the session.

The BOE has a tricky task with the U.K. economic recovery stalling but inflation accelerating. That said, at least one of the nine members on the MPC is likely to vote for an early end to asset purchases.

USD/TRY rose 0.3% to 8.6693, with the Turkish central bank meeting later Thursday and widely expected to keep the policy rate at 19%. 

The country’s consumer price index climbed to 19.25% last month, climbing above the policy rate for the first time in nearly a year, suggesting Turkey’s central bank governor will keep interest rates at high levels despite pressure from the country’s president, Recep Tayyip Erdogan.

Also, USD/NOK fell 0.4% to 8.6267 and EUR/NOK fell 0.1% to 10.1130, with the Norwegian central bank expected to become the first central bank of a G10 currency to hike interest rates post pandemic.

 

Dollar Edges Off One-Month High; Traders Digest Fed Statement
 

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Comments (3)
Ismawi Hadeni
Ismawi Hadeni Sep 23, 2021 5:18AM ET
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sell usd. usd weak !!!
Nick Farr
Nick Farr Sep 23, 2021 5:18AM ET
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Sell usd make it weak. there's nothing but gargantuan debt behind it. So what is it's true value? Zip. Bitcoin has no tangible value. Fungible it may be, but in itself it is little more than a clever man made algorithm of no physical property. it's said to be fool proof and secure, but it is man made and it can and WILL be broken one day or simply surpassed by superior technology. Gold can be made by man, but only at ridiculous cost. Algorithms are tuppence a piece by comparison and if man can make it, man can break it. It will inevitably be surpassed. Don't say it's impossible. History shows otherwise. Gold though, will remain a tangible and palpable asset. Even the alchemists concur on this.
St Af
St Af Sep 23, 2021 4:44AM ET
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Dollar$ Not Crossing Over 94 Bad For Global Economy..... CHEERS$!!!!
Kristof Naessens
Kristof Naessens Sep 23, 2021 3:54AM ET
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When you look at the FOMC statement there is no talk about tapering at a certain date, at te press conference he was  saying something else.
 
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