The US dollar continues to strengthen against the euro in trading on Thursday after jumping the day before at the results of the meeting of the Federal Reserve System (FRS).
The American Central Bank raised the base interest rate on Wednesday by 75 basis points (bp) to 3-3.25% per annum. Fed Chairman Jerome Powell said during a press conference following the meeting on the need for further rate hikes to curb inflation.
The median forecast of Fed officials suggests that the rate will reach 4.4% per annum by the end of this year and will be 4.6% by the end of 2023.
The euro/dollar pair is trading at $0.9828 as of 09:05 Moscow time on Thursday, compared to $0.9839 at the close of the previous session. On the eve of the euro lost 1.31% against the dollar.
“The Fed, in addition to another 75 bp rate hike on Wednesday, signaled that it sees the need to keep rates high for a long time,” said Sophia Ng, a currency analyst at MUFG Bank, quoted by Dow Jones.
The yen exchange rate against the dollar updated a 24-year low on Thursday after the publication of the results of the meeting of the Bank of Japan.
The Japanese Central Bank left unchanged the main parameters of monetary policy: the short-term interest rate on deposits of commercial banks in the Central Bank was left at minus 0.1% per annum, the target yield on ten-year government bonds is about zero.
The Bank of Japan also confirmed that it intends to keep the rate “at the current level or below.”
As of 9:05 Moscow time, the dollar/yen pair is trading at 144.89 yen against 144.08 yen at the close of the previous session. During the auction, the dollar rose to 145.37 yen.
The pound sterling depreciates against the dollar ahead of the Bank of England meeting. The pound dropped to $1.1241 from $1.1271 the day before.
Experts believe that the British Central Bank may raise the base rate on Thursday by 75 bp, which will be the highest increase since 1989. In this case, the rate will reach 2.5% per annum.
The ICE-calculated index, which shows the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), adds 0.89%, the broader WSJ Dollar Index – 0.31%.
