The US Dollar Index struck a 2-week peak following the Federal Reserve’s highly anticipated move of an increase in its benchmark lending rate. That was the first hike in rates in the US in nearly 10-years, and at 25 basis points could be the first of many. Some analysts, including those from Blackrock Securities, expect the Fed to move at least another two times in 2016, albeit generally at a gradual pace.
As reported at 10:45 am (GMT) in London, the US Dollar Index was trading at 100.20 .DXY, a gain of 0.23%. The EUR/USD pair was trading at $1.0852, down 0.47%; the pair had hit a low of $1.0832 before edging slight higher. The GBP/USD was $1.4932, down 0.41%; the pair ranged from $1.4743 to $1.5009 in today’s trading session.
More Rate Hikes Dependent on Inflation Outlook
Any additional gains for the greenback are likely to be muted given that markets had largely priced in just such an event. Going forward, the Fed will likely be mindful of the impact an appreciating Dollar could have on the inflation outlook. The Fed had indicated that four additional rate hikes were possible next year, however, that remains to be seen and will depend upon the impact this rate hike has on global growth.