U.S. Dollar Holds Gains, as Fed Remains Patient

The U.S. dollar strengthened on Wednesday in a broad advance that included gains against the euro and the Swiss franc, taking in stride the Federal Reserve’s repeated message it remains “patient” in deciding when to raise interest rates.  Market expectations the Fed would stay the course toward increasing rates underpins the dollar’s rally versus its European and Asian counterparts where policy is being loosened in a bid to spur economic growth.

Economists are expecting a U.S. rate increase sometime in mid-2015 while prices in the futures market point toward the later months of the year.  The Fed said the U.S. economy is on track for continued expansion, but did acknowledge inflation had dropped further below its longer-run objective.

“I don’t think there is a big catalyst here for the dollar. Overall, markets have run with the long dollar position and I don’t think this is likely to throw dollar bulls off course,” said Vassili Serebriakov, currency strategist at BNP Paribas in New York.  “We don’t get any additional information in terms of forecast or press conference and the language was not a surprise. So far the reaction has been muted and reflects the lack of surprises,” he said.

Reuters

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.