The dollar keeps yesterday's gains after the FED

Good Morning,

- The dollar keeps yesterday’s gains after the FED signaled it was on track to raise interest rates next year, altering a pledge to keep them near zero for a "considerable time" in a show of confidence in the U.S. economy.

- The dollar index rose to 88.998, having risen 1.0 percent on Wednesday and coming within a short distance from a near six-year high of 89.550 touched 10 days ago.

- The British pound fell to 15-month low of $1.5539 yesterday while the Australian dollar hit a 4 1/2-year low of $0.8107.

- The Federal Reserve is going to take its sweet time raising interest rates. And the market couldn't be happier. The Dow and S&P had their best days of 2014. The Dow surged 288 points. The central bank said Wednesday afternoon that it would be "patient in beginning to normalize the stance of monetary policy" and added that this new language is consistent with earlier statements that it plans to keep interest rates low for a "considerable time," which it also kept.

- Federal Reserve officials see the federal funds rate rising less by the end of 2015 than they projected three months ago, according to the median estimate of new forecasts released today. They also forecast the economy will be at full employment by the end of next year. The benchmark rate will be 1.125 percent at the end of next year, compared with a 1.375 percent median estimate in September, quarterly estimates from U.S. central bankers showed today in Washington. The rate will be 2.5 percent at the end of 2016, and 3.625 percent at the end of 2017, according to the median.

- The US unemployment rate will average 5.2 percent to 5.3 percent in the final quarter of 2015, the Fed said, compared with an estimate of 5.4 percent to 5.6 percent in September. Fed officials estimated the jobless rate at 5 to 5.2 percent in 2016, and at 4.9 percent to 5.3 percent in 2017, according to their estimates. The central tendency projections for the longer-run growth rate ranged from 2 percent to 2.3 percent, unchanged from the September forecast.

- Goldman Sachs on US dollar: USD strength set to extend. In its last 'Global Economics Weekly' note for this year, Goldman Sachs makes the case for a stronger USD in 2015 calling the current episode of USD strength 'glory days', and advising clients to stay strategically bullish on the greenback next year. The following are the key points in GS' note along with its latest foretastes for EUR/USD and USD/JPY. "The expectation that USD strength will extend remains a core element of our macro and market views. While the real trade-weighted USD is now at its strongest since 2009, the move is still quite modest when viewed in the context of real USD moves in the post-Bretton Woods era," GS clarifies. Current US exceptionalism is, in good part, relative. In terms of both policy outcomes and growth outcomes, expectations for the US are not particularly dramatic.For end-2015, GS targets EUR/USD at 1.15, and USD/JPY at 130.

- Greece fails to gather support to elect new President.

- Japan will spend up to $30 billion in a stimulus package to revive the country's regions but will keep new bond issuance in check, sources say, highlighting the tough balance Prime Minister Shinzo Abe must strike between lifting growth and fixing Tokyo's tattered finances.

- Saudi Arabia may not be aiming at the US in its hands-off policy toward falling oil prices. At a panel discussion Wednesday hosted by the Overseas Press Club and Control Risks (the latter a global risk consultancy), the speakers seemed skeptical of the idea that Saudi Arabia was refusing to prop up oil prices because it wanted to force American producers out of the market. (US shale basins are among the most expensive sources of oil to tap.) There may be better political reasons for this move.

- Gross domestic product (GDP) was up 1.0 percent in the September 2014 quarter, Statistics New Zealand said today. The growth was driven by primary industries, which increased 5.8 percent "This is some of the strongest growth in primary industries for 15 years," national accounts manager Gary Dunnet said.

Have a nice Day!