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Dollar Mixed After Fed Hikes Rates

The dollar is losing ground against its major European rivals Wednesday afternoon, but is recovering from its early losses against the Japanese Yen. As expected, the Federal Reserve announced its first interest rate increase of 2018 at the conclusion of its two-day policy meeting.

FOREX - Fri March 23, 2018

A strong labor market and strength in the broader compelled the Fed to raise its benchmark interest rate by a quarter of a percentage point, to a range of 1.5 percent to 1.75 percent.

Perhaps more importantly, the Fed reiterated its plan to raise interest rates gradually. The central bank continues to project three rate hikes in 2018.

However, the Fed now projects three rate hikes in 2019, up from the previous projection of two.

Existing home sales in the U.S. increased by much more than anticipated in the month of February, according to a report released by the National Association of Realtors on Wednesday. NAR said existing home sales jumped by 3.0 percent to an annual rate of 5.54 million in February from a rate of 5.38 million in January. Economists had expected existing home sales to rise by 0.5 percent.

The dollar has dropped to around $1.2315 against the Euro Wednesday afternoon, from an early high of $1.2246.

The buck fallen to over a 1-month low of $1.4110 against the pound sterling this afternoon, from an early high of $1.40.

The UK jobless rate in the three months to January was the joint lowest since 1975 and the employment rate rose to a record high, latest figures from the Office for National Statistics showed Wednesday.

The ILO unemployment rate eased to 4.3 percent from 4.4 percent in the three months to December. Economists had expected it remain unchanged at 4.4 percent. The rate was 4.3 percent in the August to October 2017 period.

UK public sector net borrowing excluding state-owned banks grew in February, figures from the Office for National Statistics revealed on Wednesday. The PSNB ex-banks rose by GBP 2.5 billion to GBP 1.3 billion from a year ago, when there was a surplus of GBP 1.2 billion. Economists had predicted GBP 1.8 billion borrowing for February.

The greenback dropped to an early low of Y106.005 against the Japanese Yen Wednesday, but has since bounced back to around Y106.400.

by Bakinv Staff Writer

editorial@bakinv.com

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