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Forex - Dollar steady at 5-week lows as Fed tone still weighs

ForexMar 17, 2017 03:24AM ET
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© Reuters. Dollar remains at 5-week lows vs. rivals on Fed more dovish stance

Investing.com - The dollar was little changed at five-week lows against other major currencies on Friday, as the tone of the Federal Reserve’s latest policy decision continued to dampen demand for the greenback.

EUR/USD edged up 0.11% to a five-week high of 1.0778.

The greenback weakened broadly as the Fed’s policy statement was seen as less hawkish than expected by sticking to projections of three total rate hikes in 2017 and not four as some traders had hoped for.

As expected, the Fed increased interest rates by 25 basis points to 1.00% from 0.75%.

Market participants were looking ahead to reports on U.S. industrial production and consumer sentiment due later in the day.

Meanwhile, the euro remained supported after centre-right Prime Minister Mark Rutte beat anti-Islam politician Geert Wilders in the Dutch election on Wednesday, easing concerns over a potential Dutch exit from the European Union.

GBP/USD slipped 0.14% to 1.2341, pulling away from the previous session’s two-week high of 1.2378.

The pound had strengthened after the Bank of England held interest rates at record lows on Thursday, but the meeting minutes showed the monetary policy committee was split on the decision.

Elsewhere, USD/JPY held steady at 113.31 as markets were also digesting the Bank of Japan’s decision to leave its monetary policy unchanged at the end of its policy meeting on Thursday, underscoring the diverging policy paths of major global central banks.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was steady at 100.07, the lowest since February 9.

Forex - Dollar steady at 5-week lows as Fed tone still weighs
 

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WeeChong Lee
WeeChong Lee Mar 17, 2017 3:39AM ET
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The probably of a March rate hike on Feb 9 was less than 50% with two hikes with a slightly higher probably in 2H of 2017. Fast forward to today - the rates were raised, the Fed kept to what they have been saying all along for 3 or more hikes this year and even gave their projection for 2017 and 2018 target rates. Yet, DXP is no higher than it was. What this implies is that the present dollar value is still pricing out the March hike.
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