On Thursday, June 17, the USD surged to levels not seen for two months. This comes after succeeding the US Federal Reserve policy meeting giving a hawkish stance.
The USD/JPY pair traded 0.1% higher at 110.75 upon reaching a recent high of 110.83. This is a level that wasn’t seen since April 1.
Consequently, the risk-sensitive AUD/USD also soared 0.1% to 0.7617 upon recovering from a degree following an earlier stumble of 0.7598, which is its lowest since April 13.
On the other hand, EUR/USD plunged 0.1% to 1.1986 after crashing overnight by 1.0%. This is its biggest fall since April 2020.
While the GBP/USD stayed flat at 1.3987, which is hovering around its lowest level since May 7.
Elsewhere. The kiwi dollar is the only major currency withstanding USD’s progress as NZD/USD spiked 0.4% to 0.7076.
This was after the surge of New Zealand’s gross domestic product to 1.6% in the first quarter from the previous one.
This increase is a lot farther than the expected gain of 0.5% as a surging property market aided the economy in overcoming its collapsing tourism sector.
Furthermore, USD/BRL was largely flat at 5.0556 succeeding the decision of the central bank of Brazil to uplift its benchmark interest rate by 75 basis points to 4.25%.
The policy was made due to the country’s struggle in coping with the rising inflation.
Meanwhile, the US Dollar Index, which trails the greenback in opposition to a basket of its rival currencies advanced 0.2% at 91.418.
This succeeds its spiking rate by 1.0% overnight, which is its highest jump since March 2020.
Rate Hike
Moreover, the Fed announced that it is going to implement an interest rate hike in 2023.
It disclosed that 11 out of 18 central bank policymakers planned the hike of 25 basis points.
An analyst stated that in its previous meeting, none of these officials were looking for this hike in the succeeding years.
Meanwhile, for now, they would keep the monetary policy supportive in encouraging a labor market recovery.
In addition, the meeting also tackled how to conclude the emergency bond-buying.
The Fed also added that the coronavirus pandemic is no longer a major hindrance to US commerce.
Since the economy is quickly recovering, the market had been anticipating the Fed to talk about the timetable for reining in its huge bond-buying program.
However, this hawkish turn was a surprise for the investors.
