TheÂ US dollar is strengthening against most major currency rivals midweek asÂ theÂ Federal Reserve left interest rates unchanged amid aÂ strong national economy. TheÂ greenback is also reacting toÂ higher price inflation andÂ aÂ robust housing market.
OnÂ Wednesday, theÂ Federal Reserve announced that it is leaving interest rates unchanged atÂ aÂ target range ofÂ 1.50% andÂ 1.75%. TheÂ market widely anticipated that theÂ Fed would not cut rates, especially following last weekâs impressive November jobs report. TheÂ announcement came after concluding theÂ central bankâs final Federal Open Market Committee (FOMC) meeting forÂ 2019. InÂ theÂ end, theÂ central bank cut rates three times this year.
In its December policy statement, the Fed signaled no changes to rates in 2020. Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.
TheÂ Committee judges that theÂ current stance ofÂ monetary policy is appropriate toÂ support sustained expansion ofÂ economic activity, strong labor market conditions, andÂ inflation near theÂ Committeeâs symmetric 2 percent objective. TheÂ Committee will continue toÂ monitor theÂ implications ofÂ incoming information forÂ theÂ economic outlook, including global developments andÂ muted inflation pressures, asÂ it assesses theÂ appropriate path ofÂ theÂ target range forÂ theÂ federal funds rate.
OnÂ theÂ data front, theÂ consumer price index (CPI) rose 0.3% inÂ November, lifting theÂ 12-month inflation rate toÂ 2.1%. This is theÂ highest level theÂ cost ofÂ living has been since November 2018 asÂ households paid more forÂ energy, health care, andÂ rent. TheÂ market had anticipated aÂ 0.2% gain.
According toÂ theÂ Mortgage Bankers Association (MBA), mortgage applications climbed 3.8% inÂ theÂ week ending December 6. This is up from theÂ 9.2% contraction inÂ theÂ previous week. TheÂ 30-year mortgage rate also edged up 0.1% toÂ 3.98% forÂ theÂ week ending December 6.
Financial markets now look ahead toÂ producer prices andÂ jobless claims onÂ Thursday, asÂ well asÂ retail sales andÂ import-export prices onÂ Friday.
TheÂ USD/CAD currency pair fell 0.32% toÂ 1.3189, from anÂ opening ofÂ 1.3231, atÂ 18:02 GMT onÂ Wednesday. TheÂ EUR/USD advanced 0.05% toÂ 1.1100, from anÂ opening ofÂ 1.1093.
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