The day after the Federal Reserve raised interest rates, investors continued to digest the prospect of monetary policy. The dollar fell slightly against a basket of major currencies on Thursday (17th), hitting a new one-week low during the session. In addition, concerns about the shortage of crude oil supply , driving oil prices soared, the Australian dollar rose more than 1% against the US dollar.
In late New York trading, the ICE U.S. Dollar Index (DXY), which tracks the U.S. dollar against a basket of major currencies, fell 0.61 percent to 98.02, with the DXY hitting an intraday low of 97.73, the lowest in a week.
The Fed announced a one-size-fits-all rate hike on Wednesday and expected the federal funds rate to reach 1.75% to 2% by the end of this year and 2.8% by the end of next year, turning its policy stance into a hawk.
“Yesterday’s strongest message was that the Fed raised rates, mainly because of concerns about inflationary pressures,” said Bipan Rai, head of FX strategy for North America at CIBC Capital Markets. “However, the market seems to have begun to bet that, despite the Fed’s stance now, the next few quarters will remain so. Change is possible.”
The euro rose 0.55% to $1.1091, a one-week high. It has been 23 days since Russia invaded Ukraine. The Russian army has continued to bomb several cities in Ukraine with missiles, causing many casualties. However, some Western officials revealed that the ground forces of the Russian army have not made substantial progress in the past few days.
The Australian dollar rose more than 1 percent to $0.7372. The International Energy Agency (IEA) said on Wednesday that 3 million barrels of Russian oil and products may not flow into the market every month from April due to the Russian-Ukrainian war. News of the impact on market supply drove oil prices up sharply.
Sterling was up 0.05% at $1.3149. After the Fed raised interest rates for the first time in more than three years, the Bank of England (BOE) followed suit, announcing a one-size-fits-all rate hike on Thursday, in line with market expectations, but has softened its rhetoric on whether further rate hikes are necessary.
The Bank of England is expected to raise rates by less than 120 basis points by the end of the year, according to money market pricing.
Against the yen, the dollar was down 0.1 percent at 118.59 yen. Bank of Japan (BOJ) Governor Haruhiko Kuroda said on Thursday that Japan’s inflation is unlikely to hit the central bank’s 2 percent target even if energy costs rise, citing the central bank’s rationale for maintaining ultra-easy monetary policy.
As of Friday (18th) Taiwan time about 6:00 Price:
The dollar index was at 98.0237. -0.61% The euro against the US dollar (EUR/USD) was quoted at $1.1091 per euro. +0.5439% GBP/USD (GBP/USD) was quoted at $1.3149. +0.0533% The Australian dollar against the US dollar (AUD/USD) was quoted at 0.7372 to 1 Australian dollar. +1.1665% The US dollar against the Canadian dollar (USD/CAD) was quoted at 1.2626 Canadian dollars per US dollar. -0.4023% The U.S. dollar was quoted at 118.59 yen (USD/JPY). -0.1431%