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Hawkish Fed Lifts Dollar to Seven-Week High as Focus Turn to BOJ
Traders priced three more Fed hikes as the yen weakened ahead of an expected BOJ increase, keeping the U.S.-Japan rate gap wide.
- On Thursday, the dollar clung to a seven-week high after the Federal Reserve raised interest rates, with new central bank chief Kevin Warsh joining a unanimous decision and signaling a hawkish path forward.
- The Fed lifted borrowing costs on Wednesday for the first time since 2023 and projected further increases, prompting traders to price three additional hikes by the middle of next year.
- Rate futures markets now reflect a 90% probability of a follow-up quarter-percentage-point Fed rate hike by year-end, while the dollar's strength pushed the euro to $1.1456 near a seven-week low and kept sterling flat at $1.3377.
- Attention now turns to the Bank of Japan, expected to raise interest rates to a 31-year high on Friday while signaling readiness to keep pushing up borrowing costs amid persistent inflation pressures.
- Analysts at OCBC said "the bigger question is how Governor Ueda frames the path beyond September, particularly whether the BoJ signals a faster pace of normalisation amid still-elevated inflation.
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Hawkish Fed lifts dollar to 7-week high as focus turn to BOJ
In a remarkable shift, the dollar has climbed to its highest point in seven weeks after the Federal Reserve's decision to elevate interest rates and hint at more hikes. Investors are now keenly watching the forthcoming decisions from the Bank of England and the Bank of Japan. The surge in the dollar's value has brought the euro down to its lowest mark in almost seven weeks.
·India
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Hawkish Fed lifts dollar to seven-week high as focus turn to BOJ
·London, United Kingdom
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The US Federal Reserve's (Fed) hawkish monetary policy messages have strengthened expectations of increased pressure on currencies in Asian markets. Market strategists note that the yen will be closely watched, especially ahead of the Bank of Japan's (BOJ) meeting on Friday.
Coverage Details
Total News Sources10
Leaning Left0Leaning Right3Center4Last UpdatedBias Distribution57% Center
Bias Distribution
- 57% of the sources are Center
57% Center
C 57%
R 43%
Factuality
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