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Forex Forecast: Dollar Drops on Fed Rate Decision

FOREX FORECAST – On Thursday, the US dollar declined after the US Federal Reserves raised the fourth rate hike this year.

The US Dollar Index, which measures the greenback’s strength against major peers, declined 0.1% to 96.393.

On Wednesday, the Fed grabbed the 2.25-2.5% target range for its benchmark fund rate. This is amid its predictions that there would be a lesser number of rate hikes next year compared to what they planned at September policy meeting.

Meanwhile, the Wall Street stumbled up and down following the central bank’s latest decision. Then, it eventually made a sharp close to the news conference of Fed Chair Powell.

The USD/CNY made an increase of 0.3% to 6.9111 following the statement of the People’s Bank of China on Wednesday. According to the PBOC, it plans to supply lower-cost liquidity for a three-year duration to banks. This is unless these banks are willing to lend more to smaller companies.

FinanceBrokerage - Forex Forecast: The US dollar on Wednesday dropped on the anticipation of investors on Fed rate decision
FinanceBrokerage – Forex Forecast: The US dollar on Wednesday dropped on the anticipation of investors on Fed rate decision

Based on a Reuters report, this move was effectively a targeted rate cut. Moreover, the article wrote that there is a tendency that the expectation of an additional monetary easing could place more pressure to yuan.

The People’s Bank of China placed a 6.8936 reference rate for the yuan. This is in comparison with the 6.8869 fix the previous day.

In other news, there was 0.4% to 112.07 losses in the USD/JPY pair. This was amid the maintenance of the Bank of Japan of its ultra-loose monetary policy. Moreover, it kept a minus 0.1% for short-term rate target and around 0% for the 10-year yield target.

Both the AUD/USD pair and the NZD/USD pair dropped. The AUD/USD declined 0.2% and the NZD/USD slumped 0.5%.

Forex Forecast: Greenback slips on Fed rate hike expectations

On Wednesday, the US dollar slumped amid the anticipation of investors for the Fed rate hike decision within the day.

The US dollar index, which measures the greenback’s strength against a basket of major peers, went lower at 0.57% to 96.06.

There were expectations that the Fed will make a 25 basis point increase for this year. Further, investors have been keeping a keen eye about the new comments on possible policy changes and forecasts next year.

According to Fed officials and Fed Chairman Jerome Powell, the interest rates are closely hitting neutral. Moreover, they have started to become more cautious concerning the FOMC policy on escalating worries about a slowdown in global growth.

Against the Japanese yen, the greenback hit lower. The USD/JPY slipped 0.3% to 112.19.

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