The United States of America dollar Surged on Thursday, June 15, with expectations of another Federal Reserve rate hike this year kept alive by a policy meeting.
By 0806 GMT, the index which measures the dollar’s broader strength was up 0.2 percent at 97.145 .DXY. Against its Japanese counterpart, the dollar rose 0.1 percent to 109.57 yen JPY=EBS, above Wednesday’s eight-week low of 108.81 yen.
The euro EUR= was 0.3 percent lower at $1.1191, down a full cent from a seven-month peak of $1.1296 scaled overnight.
As widely expected, the Fed raised interest rates a quarter percentage point to a target range of 1.0-1.25 percent on Wednesday but it also gave its first clear outline on its plan to reduce its $4.2-trillion bond portfolio.
A Reuters poll of 21 of the 23 primary dealers that do business directly with the Fed showed 14 of them now believed it would announce the start of its balance sheet normalization at its Sept. 19-20 policy meeting. The rest of them said it would make such a move at its Dec. 12-13 meeting.
Deepening political turmoil in Washington did not seem to weigh on the greenback after the Washington Post reported that U.S. President Donald Trump is being investigated by special counsel Robert Mueller for possible obstruction of justice.
On Friday, the Bank of Japan is widely expected to keep its monetary policy unchanged, and reassure markets it will lag the Fed in tapering its massive stimulus program, as Japan’s inflation remains low despite a strengthening economy.
The Australian dollar AUD=D4 rose 0.2 percent to $0.7599, moving back toward its 2-1/2-month high of $0.7636 hit on Wednesday, after a better-than-forecast employment report.
But the New Zealand dollar skidded 0.7 percent to $0.7222 NZD=D4, moving away from the previous session’s four-month high of $0.7319.
Data showed that New Zealand’s economy grew 0.5 percent in the three months to March, lower than the 0.7 percent growth forecast in a Reuters poll and well below the central bank’s forecast for 0.9 percent growth.
