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Forex - Dollar Gains Ground as Markets Digest Fed Rate Hike

ForexSep 27, 2018 04:04AM ET
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© Reuters. Dollar gains ground as markets digest Fed rate hike

Investing.com - The dollar gained ground against the other major currencies on Thursday as markets digested the Federal Reserve’s widely expected rate hike and indications that its remains on track to continue monetary tightening into next year.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.31% to 94.16 by 04:03 AM ET (08:03 AM GMT).

The Fed raised interest rates by a quarter point to 2.25% on Wednesday, its third rate hike this year and its eighth since 2015.

In its statement, the Fed said it still foresees another rate hike in December followed by three more in 2019, and one additional increase in 2020.

The central bank dropped the word "accommodative" to describe its monetary policy stance in its statement, saying the change does not signal any change in the bank's path toward normalizing monetary policy.

Some traders took the change to mean that if the Fed no longer believes its policy is accommodative, it may be moving closer to the end of its monetary tightening cycle.

While Fed Chairman Jerome Powell said he does not see inflation surprising to the upside, policymakers revised up their outlook for U.S. economic growth this year and next.

The euro was lower against the dollar with EUR/USD down 0.32% at 1.1701.

Sterling was also weaker, with GBP/USD down 0.42% to 1.3112 as investors remained pessimistic about prospects for Brexit negotiations between the UK and the European Union.

The dollar edged lower against the yen, with USD/JPY dipping 0.11% to 112.60.

Elsewhere, the Argentinian peso was lower against the dollar, with ARS/USD down 0.62% at 0.02596 after the country secured a $57 bn loan from the International Monetary Fund.

The loan is aimed at supporting Argentina’s economy in the wake of a currency crisis which has seen a run on the peso, and spiraling inflation.

Forex - Dollar Gains Ground as Markets Digest Fed Rate Hike
 

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