Dollar Jumps After Fed Hikes Rates & Updates Economic Projections

The US dollar shot to the upside after the Federal Reserve announced an interest rate hike and updated the forecast path for the federal funds rate.

The Fed made an unanimous decision to hike its target range for the federal funds rate from 0.5% to 0.75%. Ahead of the meeting, markets were considering such a move almost guaranteed, so the Fed did not surprise anyone by its decision.

The economic projections, on the other hand, did provide an important surprise, revising the predicted path for the federal funds rate in 2017. That means that US policy makers now plan to make three rate hikes next year, up from two planned earlier. Projections for economic growth and the unemployment rate also received a marginal improvement while inflation forecast remained the same.

Now, the CME FedWatch page shows about 50% probability of another hike in June.

EUR/USD sank from 1.0625 to 1.0529 as of 20:41 GMT today after rising to 1.0669 intraday. GBP/USD dipped from 1.2655 to 1.2572. USD/JPY surged from 1.5% from 115.17 to 116.88, touching the highest level since February 8.

If you have any questions, comments or opinions regarding the US Dollar,
feel free to post them using the commentary form below.

Leave a Reply

Your email address will not be published. Required fields are marked *