U.S. Dollar Slides As Fed Trims 2019 Rate Hike Outlook
December 20 2018 - 12:40AM
RTTF2
The U.S. dollar drifted lower against its major counterparts in
early European deals on Thursday, after the Fed raised interest
rates by a quarter point, while downgrading rate hike projections
for next year given uncertain global economic outlook.
Following a 2-day meeting on Wednesday, the Fed hiked interest
rates by 25 basis points to a range of 2.25 percent to 2.5
percent.
The central bank projected two rate hikes in 2019, rather than
three it had forecast in September.
The Fed statement noted that "some" further gradual rate hikes
would be needed in the year ahead, a slight revision in language of
the statement including the word "some."
The Fed officials suggested that risks to the economy "are
roughly balanced," as they flagged threats from a softening global
economic growth.
The FOMC "will continue to monitor global economic and financial
developments and assess their implications for the economic
outlook," according to the statement.
The greenback has been falling against its major counterparts in
the Asian session.
The greenback declined to 1.1486 against the euro, its lowest
since November 7. The greenback is seen finding support around the
1.16 region.
The greenback slipped to a 2-day low of 1.2705 against the
pound, from Wednesday's closing value of 1.2611. The greenback is
poised to find support around the 1.28 area.
Data from the Office for National Statistics showed that U.K.
retail sales rose for the first time in three months in November to
surpass economists' expectations.
The volume of retail sales including automotive fuel rose 1.4
percent from October, which was much faster than the 0.3 percent
growth economists had predicted.
The U.S. currency slid to near a 2-month low of 111.67 against
the yen, after rising to 112.60 at 8:00 pm ET. The next possible
support for the greenback is seen around the 110.00 level.
The Bank of Japan left its ultra-loose monetary policy
unchanged, asserting its pledge to keep interest rate extremely low
for an extended period of time amid indications of global economic
slowdown.
The board maintained interest rate at -0.1 percent on current
accounts that financial institutions maintain at the bank.
The greenback that closed Wednesday's trading at 0.9945 against
the franc weakened to a 9-day low of 0.9864. Next key support for
the greenback is likely seen around the 0.97 level.
The greenback fell to 1.3447 against the loonie, 0.7146 against
the aussie and 0.6789 against the kiwi, from its early high of
1.3504, 1-1/2-month high of 0.7086 and more than a 5-week high of
0.6725, respectively. If the greenback slides further, 1.32, 0.725
and 0.70 are likely seen as its next support levels against the
loonie, the aussie and the kiwi, respectively.
Looking ahead, at 7:00 am ET, the Bank of England announces its
decision on interest rate. Economists expect the bank to retain
benchmark rate at 0.75 percent and asset purchase target at GBP 435
billion.
Canada wholesale sales for October, U.S. leading index for
November and weekly jobless claims for the week ended December 15
will be out in the New York session.
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