Dollar Gains in Asia As Fed Views Support, BoJ Ahead
The dollar picked up strength in Asia on Thursday in Asia after the Fed took a consistent stand on paring back its balance sheet and its outlook for rate hikes and the market looks ahead to the Japan central bank's views.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.15% to 92.36.
The Bank of Japan is expected to reassure markets on Thursday that it will lag well behind its U.S. counterpart in scaling back its massive stimulus, as an improving economy has yet to boost inflation anywhere near its elusive 2% target.
The Federal Reserve said it would start to unwind $4.5 trillion in financial crisis-era support starting in October and stuck to its forecast to raise interest rates again this year, saying hurricane damage won’t derail an otherwise healthy expansion.
“Hurricanes Harvey, Irma and Maria have devastated many communities, inflicting severe hardship,” the Federal Open Market Committee said in its statement on Wednesday following a two-day meeting in Washington.
“Storm-related disruptions and rebuilding will affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term.”
As expected, policy makers left the benchmark interest rate unchanged in a range of 1 percent to 1.25 percent.
“We continue to expect that the ongoing strength of the economy will warrant gradual increases in that rate to sustain a healthy labor market and stabilize inflation around our 2 percent longer-run objective,” Chair Janet Yellen said during a press conference.
Earlier, the dollar came under pressure after sales of previously owned homes in the US unexpectedly fell in August, as tight supply continued to weigh on housing activity.
Existing home sales declined 1.7% in August from the previous month to an annualised pace of 5.35m homes, the National Association of Realtors, said on Wednesday. Economists were expecting a 0.3% rise to 5.46m homes