Dollar moves away from one month high; Traders Digest Fed Statement


By Peter Nurse – The dollar eased at the start of European trading on Thursday, retreating from a one-month high as traders digest the previous session’s Federal Reserve meeting and what it means for future policy monetary.

At 02:55 ET (0755 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, was trading 0.1% lower to 93.332, sliding from a one-month high at 93.526.

EUR / USD rose 0.2% to 1.1711, bouncing off a one-month low, USD / JPY rose 0.1% to 109.88, while AUD / Risk-sensitive USD fell 0.1% to 0.7241, near multi-week lows.

The Fed left policy settings unchanged on Wednesday, as expected, and also decided not to announce the start of the reduction in asset purchases. However, the central bank said “a moderation in the pace of asset purchases may soon be warranted,” Chairman Jerome Powell adding that board members believed the reduction could end around mid-2022. , paving the way for interest rate hikes thereafter.

“The key story is the dot plot for interest rates. The FOMC is now divided 9-9 on whether rates will be raised next year, â€ING analysts said in a note. “Note also that there is only one member of the FOMC who does not expect a rate hike by the end of 2023, a massive change from just six months ago.”

Additionally, GBP / USD rose 0.2% to 1.3654, with traders positioning themselves for a potential surprise at the Bank of England’s final policy meeting later in the session.

The BOE has a tricky job with the economic recovery slowing in the UK but inflation accelerating. That said, at least one of the nine MPC members will likely vote for an early end to asset purchases.

USD / TRY rose 0.3% to 8.6693, with Turkey’s central bank meeting later on Thursday and is expected to broadly hold the policy rate at 19%.

The country’s consumer price index climbed to 19.25% last month, topping the policy rate for the first time in nearly a year, suggesting that the governor of Turkey’s central bank will keep rates d interest at high levels despite pressure from the country’s president, Recep Tayyip Erdogan.

In addition, USD / NOK fell 0.4% to 8.6267 and EUR / NOK fell 0.1% to 10.1130, with the Norwegian central bank set to become the first central bank in a G10 currency to raise interest rates after the pandemic.

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