U.S. Dollar Advances Following Interest Rate Hike Decision By The Fed

(RTTNews) - The U.S. Dollar value moved higher on Wednesday following the announcement by the U.S. Federal Reserve to raise interest rates by 25 basis points to 4.00%, citing persistent inflation and energy-price pressure.

Today, the U.S. Dollar Index DXY, which measures the Greenback against a basket of other major currencies, was last seen trading at 100.30, up by 0.62 (or 0.62%).

While against the Euro, the USD was trading at 1.147, up by 0.66%, against the GBP, the USD was trading at 1.339, up by 0.72%.

Against the USD, the Japanese Yen was trading at 156.298, down by 0.79%, the Swiss Franc was trading at 0.826, down by 0.89%; and the Canadian Dollar was trading at 1.399, down by 0.55%.

Against one unit of Australian Dollar, the USD was trading at 0.709, up by 0.62%.

In the U.S., last week's inflation numbers came in well above the Fed's target of 2.00%.

As expected by market participants, at the end of the two-day meeting of the Federal Open Market Committee (which began yesterday), today the Fed announced that the committee decided to raise the target range for the federal funds rate by a quarter percentage point to 3.75% to 4.00%.

The FOMC voted 12-0 to increase its key interest rate.

This is the first rate-hike by the Fed since July 2023 and the first rate-increase under Federal Reserve Chair Kevin Warsh.

Stating that he refrained from submitting dot plot, Warsh commented that the economy is resilient, but the inflation is too high.

Fed officials anticipate one more rate hike this year, according to their quarterly projections, and expect rates to remain unchanged through next year.

On the economic front in the U.S., the Mortgage Bankers Association of America revealed that the Purchase Index in the U.S. decreased to 156.20 on September 11 from 157.50 of the previous week.

The U.S. Census Bureau revealed that the retail sales increased 1.20% month-over-month in August, the most in five months, exceeding expectations of a 0.80% increase.

Today, citing people familiar with the matter, Reuters reported that Saudi Arabia is offering substantial loadings of crude oil to Asian refiners via ship-to-ship (STS) transfer, off Oman's Sohar port.

Citing unnamed traders, Bloomberg reported that Saudi Arabia sold nearly 20 million barrels of crude oil in the spot market, so far this week. After two sessions of surge, today, crude oil prices plunged by more than 3.00%.

The U.S.-Iran conflict (which erupted in late February) and the Saudi Arabia-Houthi conflict (which flared up recently) are showing no signs of easing.

At the insistence of Oman, a meeting between the foreign ministers of the Gulf Cooperation Council with Iranian leaders was slated to be held at Oman's port city of Salalah on Monday.

Just hours before the discussions, on Sunday evening, Oman's Foreign Minister Badr Albusaidi announced its postponement.

Iran also denied claims made by U.S. President Donald Trump that Iran was seeking a deal with the U.S. very badly. Iran asserted that it would agree for talks only if its conditions are met.

Saudi Arabia had shut its vital East-West pipeline following last week's drone attacks by Iran-backed Houthi militants of Yemen.

Today, Saudi Arabia announced that its air defenses intercepted and destroyed a drone that attempted to enter Mecca.

Citing two Israeli officials, Axios reported that top military commanders from the U.S., Israel, and several Arab nations met in Germany last week to discuss the U.S.-Iran conflict.

Organized by the Commander of U.S. Central Command Admiral Brad Cooper, reportedly, the meeting was intended to discuss ways to effectively contain the Houthi rebels from taking control over the Bab el-Mandeb Strait.