The Japanese yen and euro were surpassed by a much stronger dollar on early Thursday following the decision of the U.S. Federal Reserve that was perceived as non-hawkish due to incited interest rate hike expectations.
The U.S. dollar touched its best level since July 18 as it edged up more than 0.4 percent against the Japanese yen at 112.640 yen. However, the gains of the greenback against the safe-haven currency were only limited. The euro as well didn’t perform well on the day as it fell about 0.15 percent at $1.1877 following a 0.8 percent drop in the previous trade. This is the time when the common currency rose for four straight sessions.
As widely expected, the U.S. Federal Reserve left rates on their default level but indicated its expectations that another rate hike will take place before 2017 ends, regardless of the previous occurrence of low inflation. The U.S. central bank also announced it will start to wind down as much as $4.2 trillion in its securities that are mortgage-backed and U.S. bond holdings acquired in the midst of a financial crisis last 2008.
According to the FedWatch Tool from CME, traders of interest rate futures are currently pricing approximately 70 percent chance of Fed inciting an interest rate hike this coming December, higher compared to the 50 percent chance from the previous Fed meeting.
Looking on the index which measures the value of the U.S. currency against its major opposing currencies, the dollar index, rose more than 0.1 percent at 92.623.