US Dollar Resumes Decline After Bouncing on FOMC Projections

The US dollar was moving lower ahead of the policy meeting of the Federal Open Market Committee but bounced sharply afterwards. Yet coming into the Thursday’s Asian session, the currency resumed its decline.
As was widely expected, the FOMC hiked the target range for its federal funds rate by 25 basis points to 2.25%-2.5%. What was really interesting to market participants, were the economic projections and the accompanying statement.
According to projections, US policy makers expect two hikes in 2019. While the number is below the three hikes promised in the previous forecasts, it was still above expectations of many experts. Yet the word “some” in description of further increases led many analysts to believe that the rate setters are preparing for a pause in the rate hike cycles. In fact, even after the announcement there were still forecasts for just one hike in 2019.
As for the rest of the projections for 2019, almost all of them were worse than in the September forecast. The projection for GDP growth was revised from 2.5% to 2.3%. Both headline and underline PCE inflation got a negative revision by 10 basis points to 1.9% and 2.0% respectively. Only the forecast for the unemployment rate remained unchanged, staying at 3.5%.
EUR/USD edged up from 1.1376 to 1.1383 as of 00:12 GMT today. GBP/USD ticked up from 1.2609 to 1.2620. USD/JPY was little changed at 112.49 after falling to 112.34 earlier.

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