U.S. Dollar Higher on Fed’s Quiet Confidence in U.S. Economy

The dollar took the upper hand on Thursday after the Federal Reserve signaled it was on track to raise interest rates next year, altering a pledge to keep them near zero for a “considerable time” in a show of confidence in the U.S. economy.  The Fed said it would take a “patient” approach in deciding when to bump borrowing costs higher, guidance which it said is consistent with its previous statement that rates will be low “for a considerable time.”

Fed Chair Janet Yellen told a news conference that the statement meant it was unlikely to hike rates for “at least a couple of meetings,” meaning April of next year at the earliest.  “The markets have had some relief as the Fed is moving forward as planned, but not too fast, in raising rates,” said Takako Masai, the head of market research at Shinsei Bank.

The dollar index .DXY =USD rose to 88.998, almost flat in Asia but having risen 1.0 percent on Wednesday and coming within a striking distance from a near six-year high of 89.550 touched 10 days ago.  Against the yen, the dollar rose to 118.58 yen JPY=, extending its rebound from one-month low of 115.565 hit on Tuesday on fears over falling oil prices and the beleaguered Russian rouble.


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