The greenback rallied across the broad against majority of its peers and rose to a 5-week high in post-FOMC trading on Wednesday as the Fed chairman Powell boosted his inflation forecast which confirms the market's expectation on rate hike in March together with a more aggressive tightening policy.
Reuters reported the Federal Reserve on Wednesday signaled it is likely to raise U.S. interest rates in March and reaffirmed plans to end its bond purchases that month as well before launching what was characterized as a significant reduction in its asset holdings. The combined moves will complete the Fed's pivot away from the loose monetary policy that has defined the coronavirus pandemic era and toward a more urgent fight against inflation. Fed Chair Jerome Powell, speaking in a news conference after the end of a two-day policy meeting, said the U.S. central bank will be open-minded as it adjusts monetary policy to keep persistently high inflation from becoming entrenched.
Versus the Japanese yen, dollar found renewed buying at 113.79 in Asian morning and gained to 114.23 in European morning on cross-selling in jpy together with rebound in U.S. yields. The pair then ratcheted higher to an intra-day high at 114.69 after Fed's hawkish comments in post-FOMC New York before stabilising.
The single currency met renewed selling at 1.1310 in Asian morning and tumbled to 1.1272 at New York open on cross-selling in euro especially vs sterling. Despite rebounding to 1.1300 in New York , the pair then erased its gains and tumbled to a fresh 1-month bottom at 1.1236 in post-FOMC trading on broad-based usd's strength.
The British pound retreated from 1.3521 in Asian morning to 1.3493 in European morning before recovering to 1.3523 in Europe. Despite edging higher to 1.3525 in New York afternoon, cable then erased its gains and fell to an intra-day low of 1.3445 in post-FOMC trading on hawkish comments by Fed's Powell.
Data to be released on Thursday:
New Zealand CPI, Australia Westpac leading index, export prices, imports prices, Germany Gfk consumer sentiment, Swiss exports, imports, trade balance, Italy industrial sales, U.S. durable goods, durables ex-transport, durables ex-defense, GDP, PCE prices, initial jobless claims, continuing jobless claims, pending home sales, KC Fed manufacturing and Canada average weekly earnings.
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