Forex News: Hawkish Fed Backs Dollar, Yen Recovers
- The dollar surged versus the euro and sterling on the US Federal Reserve meeting’s outcome.
- There’s a 75% probability that the Fed will have a 25 basis point on December’s rate hike
- The Aussie dollar declined after China reported that the PPI data is weaker-than-expected.
FOREX NEWS – On Friday, the dollar increased in battling against the euro and sterling. This is amid the decision of the US Federal Reserve to make the interest rates steady. However, the Fed reaffirmed its monetary tightening stand and plans to implement a rate hike in December.
Meanwhile, investors turned their focus back to the divergence between the US monetary policies and other major economies. For instance, Japan’s interest rates are remaining extremely low. Consequently, the yen stayed at a five-week low in battling against the dollar.
Meanwhile, the dollar index, which measures the greenback against a basket of other currencies, traded at 96.75. This is the dollar’s new one-week high.
Ray Attrill is the head of the currency strategy at NAB. According to him, “the Fed looks set to raise rates in December.”
“They have been largely unfazed by the equity market correction in October,” he added.
Attrill said the strength of the dollar trails a soft euro and edgy sterling during some previous trading sessions.
For this year, the Fed has raised its interest rates three times. Markets expect that the Fed will have another rate hike in December. This is behind the strong US economy, increasing inflation and concrete jobs growth.
CME group’s FedWatch tool reported that there is a 75% probability that the Fed will declare a 25% increase.
Further, analysts expressed expectations that the Fed will have additional rate hikes next year.
Forex News: Dollar Slightly Gains on Fed Outcome; Aussie Dollar Declines
On Friday, the dollar made a minimal change following the decision of the Federal Reserve to hold the interest rates. Meanwhile, the Aussie dollar dropped as China released a softening PPI data.
As of 12:26 AM GMT (05:26 GMT), the US dollar index gained 0.08% to 96.58. The Fed outcome backed the dollar overnight.
Meanwhile, the AUD/USD pair declined 0.2% following the weak China PPI data.
Elsewhere, USD/CNY pair increased 0.2% to 6.9483 on People’s Bank of China’s setting of the yuan reference rate to 6.9329. Meanwhile, the USD/JPY dropped 0.1% to 113.91.