USA dollar surges after Fed policy statement

USA dollar surges after Fed policy statement”

The dollar remained broadly lower against other major currencies on Friday, despite recent upbeat US data and the possibility of another rate hike by the Federal Reserve this year, as tensions between the USA and North Korea weighed on market sentiment.

"We are working down our balance sheet because we feel stimulus is no longer needed", Fed Chair Janet Yellen told a news conference after the Fed ended its two-day policy meeting on Wednesday.

However, the central bank indicated that one more interest rate hike is likely this year, even though it reduced its outlook for inflation this year from 1.7% to 1.5%, and from 2% to 1.9% in 2018.

The US Federal Reserve on Wednesday kept interest rates unchanged, but announced that it will start to unwind its $4.5 trillion balance sheet from October, a further step to end the loose monetary policy. Most assets consist of the Treasurys and mortgage-backed securities the bank acquired under its quantitative easing program.

Wednesday's Federal Open Market Committee meeting will provide a boost for the United States dollar as markets reprice a higher chance of a December rate hike after toning down their expectations earlier, says Sireen Harajli, a foreign-exchange strategist at Mizuho Bank in NY.

The US dollar increased to 0.9698 Swiss franc from 0.9625 Swiss franc, and it moved up to 1.2357 Canadian dollars from 1.2272 Canadian dollars.

The US dollar was bought at JPY112.55, higher than JPY112.27 in the previous session.

On Monday, the loonie touched its weakest in almost two weeks at C$1.2338 after a Bank of Canada policymaker said the currency's strength will be a factor in future interest rate decisions.

In the week ending September 16, preliminary figures for seasonally adjusted unemployment claims reached 259,000, down 23,000 from the previous week's revised rate, the Labor Department said on Thursday (9/21).

Year-on-year, New Zealand's economy grew 2.5% in the last quarter, as expected.

The, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.29% at 91.70 by 05:15 a.m. ET (09:15 GMT), off Thursday's one-week highs of 92.42.

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