U.S. Dollar Rises After Fed Rate Hike

(RTTNews) - The U.S. dollar strengthened against other major currencies in the Asian session on Thursday, after the U.S. Federal Reserve delivered its first interest-rate hike since July 2023, and suggested rates may need to go still higher to get inflation under control.

According to forecasts published after the meeting, Fed officials expect the federal funds rate to end this year at 4.1 percent, up from the current range of 3.75 percent to 4 percent following the latest 25-bps increase.

According to data from CME Group, investors currently bet on a 38 percent probability the Fed could hike the federal funds rate to a range of 4.25 percent to 4.40 percent by the end of the year.

At his press conference, Fed Chair Kevin Warsh struck a decidedly hawkish tone, saying that inflation is too high and has been too long.

Pointing to solid hiring trends, corporate profits and investments by businesses, Warsh said the economy has strengthened since policymakers last met in June.

As focus shifts to broader and more persistent inflation pressures, investor attention is now heavily focused on upcoming U.S. inflation and labor-market data ahead of the October meeting.

U.S. stock futures ticked higher after the U.S. House of Representatives passed legislation pushing AI data centers to cover new power and transmission costs.

In the Asian trading today, the U.S. dollar rose to more than 1-1/2-month highs of 1.1456 against the euro and 1.3369 against the pound, from yesterday's closing quotes of 1.1469 and 1.3382, respectively. If the greenback extends its uptrend, it is likely to find resistance around 1.13 against the euro and 1.32 against the pound.

Against the Swiss franc and the yen, the greenback edged up to 0.8261 and 156.28 from Wednesday's closing quotes of 0.8254 and 156.04, respectively. The greenback may test resistance around 0.84 against the franc and 161.00 against the yen.

The greenback advanced to a 1-week high of 1.3998 against the Canadian dollar, from yesterday's closing value of 1.3989. The next possible upside target for the greenback is seen around the 1.40 region.

Against the Australia and the New Zealand dollars, the greenback edged up to 0.7086 and 0.5710 from Wednesday's closing quotes of 0.7088 and 0.5719, respectively. On the upside, 0.69 against the aussie and 0.55 against the kiwi are seen as the next resistance levels for the greenback.

Looking ahead, Eurozone CPI data for August is due to be released in the 5:00 am ET.

In the New York session, Canada PPI for August and raw material prices for August, U.S. building permits and housing starts for August, U.S. weekly jobless claims data, U.S. Philly Fed business conditions for September and U.S. pending home sales for August are slated for release.