LONDON, May 15 (Reuters) – The U.S. Federal Reserve kept interest rates on hold until Thursday, after it signaled another rate hike later this year amid a focus on policy announcements from the European Central Bank later in the day. The dollar has risen.
of Fed policymaking The US has canceled its 10th consecutive rate hike, but its forecast, or dotplot, showed that policymakers expect two more rate hikes by the end of 2023. Fed Chair Jerome Powell said a 2023 rate cut was not appropriate.
“The Fed made a hawkish skip,” said Mohit Kumar, chief European financial economist at Jefferies.
“We expected the upgrade to reflect the possibility of one more rate hike, so the dotplot revision was more hawkish than we expected.”
The dollar index against a basket of currencies rose 0.2 percent to 103.09 by 1026 GMT, recovering from Wednesday’s four-week low of 102.66.
Market attention now turns to other central bank decisions later this week. ECB policy announcement Late Thursday, before the Bank of Japan on Friday.
The euro was flat against the dollar at $1.0841 after reaching a four-week high of $1.0865 on Wednesday.
Money market traders expect the ECB to raise deposit rates by 25 basis points and another quarter of a percentage point in July.
“Markets will want communication about balancing risks and the need for more interest rate hikes, but the potential for significant market swings is far greater than the recent ECB decision,” said ECB Governor Christopher Kerr Lomholt. I think it’s small,” he said. Responsible for foreign exchange and corporate research at Danske Bank.
“Our hope is that the U.S. economy will do better than the eurozone, so the dollar looks like an attractive currency to buy compared to many other currencies, including the euro,” Romholt added. .
of Bank of Japan It is expected to maintain its ultra-dovish stance and yield curve control setting following Friday.
“No change in yield curve control is expected at tomorrow’s meeting, but we believe we are close to a policy shift,” said Romholt of Danske Bank.
The yen fell as much as 1 percent to 141.50 yen to the dollar, its lowest level since Nov. 23, with analysts eyeing signs of further currency intervention.
“With the dollar/yen at year-to-date highs, there is growing talk in the market that a further rally could trigger a verbal and effective intervention by the Bank of Japan in the foreign exchange market,” Romholt added. rice field.
Japan’s top government spokesman said on Thursday that the currency market was volatile. it was an unwanted move And the authorities will take “appropriate” measures if necessary.
The kiwi dollar fell 0.6% to $0.6172 after data showed the health of New Zealand’s economy. got into a technical situation The recession deepened in the first quarter, raising questions about further rate hikes.
China’s offshore yuan fell to 7.1916 yuan to the dollar, the lowest since November, following the People’s Bank of China (PBOC) announcement. reduce borrowing costs Medium-term policy loans increased for the first time in 10 months. The lowest price was $1 = 7.1619.
This follows Tuesday’s cut in the central bank’s short-term policy lending rate, with analysts widely expecting the country’s benchmark rate to be cut next week.
“Broader stimulus is expected after the rate cut earlier this week.” strengthen the economysaid Sim Moe Siong, currency strategist at Bank of Singapore.
Reporting by Samuel Indyk, additional reporting by Rocky Swift. Editing: Edmund Klamann, Sohini Goswami, Shweta Agarwal
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