Dollar on defensive after Fed leaves rate outlook unchanged

SINGAPORE - 14 December 2017: The dollar remained on the defensive on Thursday, having tumbled after the Federal Reserve raised interest rates as expected, but left its rate outlook for the coming years unchanged.

There was limited reaction among major currencies after China raised interest rates marginally, in the wake of the Fed’s move.

The dollar index, which tracks the greenback against a basket of six major currencies, eased 0.1 percent to 93.372 .DXY after falling 0.7 percent on Wednesday.

The Fed raised key short-term rates by a quarter point to a range of 1.25-1.50 percent on Wednesday. The Fed projected three more hikes in both 2018 and 2019, unchanged from the last round of forecasts in September.

Traders and analysts said the dollar came under pressure after the Fed’s policy announcement as the U.S. central bank kept its interest rate projections steady rather than revising them higher.

Some market participants had speculated the Fed could raise its interest rate projection for next year to four rate hikes, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.

There was limited reaction among major currencies after China raised interest rates marginally, in the wake of the Fed’s move.

The dollar index, which tracks the greenback against a basket of six major currencies, eased 0.1 percent to 93.372 .DXY after falling 0.7 percent on Wednesday.

The Fed raised key short-term rates by a quarter point to a range of 1.25-1.50 percent on Wednesday. The Fed projected three more hikes in both 2018 and 2019, unchanged from the last round of forecasts in September.

Traders and analysts said the dollar came under pressure after the Fed’s policy announcement as the U.S. central bank kept its interest rate projections steady rather than revising them higher.

Some market participants had speculated the Fed could raise its interest rate projection for next year to four rate hikes, said Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore.