Buck rises to best value since March post-Fed
The U.S. dollar is trading at its strongest overall level since the end of March, according to the Bloomberg Dollar Spot Index, following a “hawkish” Federal Reserve policy announcement.
Pulse
Buck rises to best value since March post-Fed
Indeed, officials made it clear that inflation remains the primary concern, while also highlighting that the economy remains on “solid” footing, supported by strong productivity and capital investment. According to most analysts, more than half of the Federal Open Market Committee now appears to expect at least a few rate hikes before year-end. Yesterday marked the fourth consecutive meeting in which voting members chose to leave borrowing costs unchanged.
As the buck strengthened throughout the afternoon, it posted its best single-day performance since March 2. The final month of Q1 saw USD gains across the board as the conflict in the Middle East began and the “petro-dollar” effect took hold in energy markets. We shall see whether the rally holds as we end the week early in observance of the Juneteenth holiday on Friday. MonexUSA offices will be closed.
EUR
The Euro fell alongside every other G-10 currency as a combination of the Fed’s tightening bias and optimism surrounding a potential peace deal fueled a major dollar surge. Markets are now fully pricing in a rate hike by October after 9 of 18 officials projected at least one increase in 2026. The European Central Bank is not the only central bank prioritizing inflationary pressures. With recent economic indicators showing a divergence in performance, the buck has gained additional appeal, while domestic equity markets have also continued to flourish.
GBP
Pound sterling posted its steepest drop since September, sliding sharply after the Fed decision and extending its decline after the Bank of England released its monetary policy statement. Interest rates were left unchanged in a 7-2 vote, with the dissenters favoring a 25-basis-point increase. BOE Governor Andrew Bailey defended the majority’s view that there is no immediate need to adjust rates, while also pointing to the potential for energy prices to decline as tensions in the Persian Gulf fade. "Cable" is now trading at its weakest level since the start of April.