Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
News: Latest News
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance Pro.CalendarSectors 
All NewsEconomyCurrencies & ForexEconomic EventsCryptocurrenciesCybersecurityPress Releases

Dollar jumps after Fed pulls interest rate hikes into 2023

06/16/2021 | 03:08pm EDT
FILE PHOTO: A security guard walks past a montage of old U.S. dollar bills outside a currency exchange bureau ahead of a scheduled State visit by the U.S. President Barack Obama in Kenya's capital Nairobi

NEW YORK (Reuters) -The dollar jumped to a near six-week high on Wednesday after the Federal Reserve brought forward its projections for the first post-pandemic interest rate hikes into 2023, citing an improved health situation and dropping a long-standing reference that the crisis was weighing on the economy.

The dollar index, which tracks the greenback against six major currencies, was up 0.63% at 91.103, its highest since May 6.

A majority of 11 Fed officials penciled in at least two quarter-point interest rate increases for 2023, even as officials in their statement pledged to keep policy supportive for now to encourage an ongoing jobs recovery.

The projections showed the outlook for inflation jumping this year, though the price increases were still described as "transitory." Overall economic growth is expected to hit 7%.

"The interesting thing is that the Fed has gone beyond simply acknowledging that inflation is rising and that the U.S. economy has a lot of momentum, and it has essentially shifted to a much more hawkish stance in this set of projections," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

Against the Japanese yen, the dollar rose 0.39% to 110.49 yen, its highest since April 6.

The dollar, which slumped through much of 2020, staged a rebound earlier this year, but that relief rally appeared to run out of steam through May as investors remained convinced that the Fed will keep interest rates lower for longer as it seeks to support the economy.

While the Fed's new language does not mean a change in policy is imminent it does provide more support for the greenback, analysts said.

"I think we're back to talking about a mild rally in the U.S. dollar and the data becoming very important over the summer period prior to Jackson Hole and September's meeting," said Simon Harvey, senior FX market analyst at Monex Europe.

Risk-sensitive currencies logged a sharp reversal following the Fed announcement, with the New Zealand dollar down 0.98% at $0.7049 and the Australian dollar - which is seen as a proxy for risk appetite - up 0.95% at $0.7612.

Sterling, which had strengthened against the dollar on Wednesday after data showed British inflation unexpectedly jumped above the Bank of England's 2% target in May, gave up those gains to trade down 0.49%.

Meanwhile, bitcoin's recent rally appeared to run out of steam, as the world's largest cryptocurrency fell 4.34% to $38,430.03.

(Reporting by Saqib Iqbal Ahmed in New York and Elizabeth Howcroft in London; Editing by Alison Williams, Will Dunham and Alex Richardson)

By Saqib Iqbal Ahmed and Elizabeth Howcroft


ę Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / EURO (AUD/EUR) -0.45% 0.62255 Delayed Quote.-0.66%
EURO / JAPANESE YEN (EUR/JPY) -0.36% 129.718 Delayed Quote.3.31%
LONDON BRENT OIL -0.36% 74.42 Delayed Quote.44.68%
SIGNPOST CORPORATION 1.41% 717 End-of-day quote.-16.14%
TESLA, INC. -2.28% 643.81 Delayed Quote.-6.81%
Latest news "Economy & Forex"
03:37pSoybeans rise for second day after U.S. crop conditions report
RE
03:28pU.s. cdc says 163,312,474 individuals have been fully vaccinated against covid-19 as of july 27 vs 163,173,366 individuals as of july 26
RE
03:28pU.s. cdc says 188,996,475 individuals have received at least one dose of covid-19 vaccine as of july 27 vs 188,729,282 individuals as of july 26
RE
03:28pU.s. cdc says administered 342,607,540 doses of covid-19 vaccine as of july 27 vs 342,212,051 doses administered as of july 26
RE
03:28pU.s. cdc says delivered 395,460,845 doses of covid-19 vaccine as of july 27 vs 394,949,575 doses delivered as of july 26
RE
03:23pInternational investor concerns mount over China's tech rout
RE
03:11pWall St drops as caution rises before big tech earnings, Fed
RE
03:08pOil prices steady as virus spread counters tight supplies
RE
03:05pWall St drops as caution rises before big tech earnings, Fed
RE
03:04pWorld stocks wobble on China, U.S. real yields slip before Fed meet
RE
Latest news "Economy & Forex"