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Dollar Inches Up After Fed; Aussie Dollar Also Gains

2018-9-27 15:24:18Basics of Trading
Dollar Inches Up After Fed; Aussie Dollar Also Gains

The U.S. dollar inched up on Thursday after the Federal Reserve increased the overnight funds rate to a range of 2.00% to 2.25%.
The U.S. dollar index, which tracks the greenback against a basket of other currencies, was trading at 93.89 by 12:47AM ET (04:47 GMT), up 0.01%.
The Fed’s Chairman Jerome Powell also discussed trade related issues, adding that the Fed had heard a "rising chorus of concerns from businesses all over the country."
He also indicated there was no change in his thinking on monetary policy, although the Fed made an amendment to the statement by removing the use of “accommodative” to describe its stance on monetary policy.
There was much debate about whether removal of that key phrase was hawkish or dovish, but the Fed chief poured some cold water on the speculation.
"The change does not signal any change in the likely path of policy," Powell said at his press conference. "Instead it is a sign that policy is proceeding in line with our expectations."
Powell also noted that he doesn't see inflation surprising to the upside.
The dollar initially sold off quickly following the statement, as markets believed the removal of "accommodative" in the statement indicates less urgency for tightening. Some analysts said, however, that it was "stretch" to suggest such tweak in language was dovish.
"We had anticipated this (the removal of accommodative), based on what we thought were strong clues in the most recent FOMC minutes, though this change was debated by analysts. Some would read this change as dovish, though we think that’s a stretch," JPMorgan (NYSE:JPM) said.
Elsewhere, the NZD/USD pair traded 0.13% to 0.6655 as the Kiwi was being pressured by a dovish monetary policy statement by the Reserve Bank of New Zealand.
The RBNZ kept its official cash rate at a record low of 1.75% as expected and confirmed the rate would remain at that level into 2020.
The AUD/USD pair on the other hand edged up 0.01% to 0.7259.
Meanwhile, the USD/CNY pair last traded at 6.8731, down 0.1%, as the People's Bank of China (PBOC) set the yuan reference rate at 6.8642 vs Wednesday's fix of 6.8571.