HomeContributorsFundamental AnalysisUS Dollar Jumps At Fed Signals One More Rate Hike This Year

US Dollar Jumps At Fed Signals One More Rate Hike This Year

The Fed’s meeting yesterday was in line with expectations as the central bank announced its balance sheet normalization which starts in October. The Fed will be unwinding $10 billion per month in a mix of both Treasuries and MBS’s. The central bank also signaled that there could be one more rate hike by the end of this year.

Inflation expectations were cut back from policy makers for 2017 and 2018, and there was one less rate hike projected for next year. The Fed’s meeting saw the US dollar postingstrong gains with the markets now re-pricing the possibility of another rate hike this year.

Later in the evening, New Zealand’s quarterly GDP data showed that the economy expanded at a pace of 0.8% as expected. Q1 GDP data was also revised higher to show a 0.6% increase.

Looking ahead, the BoJ’s monetary policy and press conference are coming up today. The central bank is expected to keep policy unchanged at today’s meeting. The ECB President, Mario Draghi will be speaking later in the afternoon which could pose some risks for the euro currency.

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