After Rate Hike, Dollar Hits 7-Week High
The dollar rises following the Federal Reserve's decision, while the Bank of England awaits its decision.
Translated by Qiyas from الجريدة — Original source
The US dollar held its highest level in seven weeks on Thursday after the Federal Reserve raised interest rates and hinted at further increases in the coming months, as investors awaited decisions from the Bank of England later today and the Bank of Japan on Friday.
The dollar rose sharply in tandem with US Treasury yields, after new central bank governor Kevin Warsh joined a unanimous vote to raise interest rates, while officials signaled further monetary tightening and anticipated another increase in 2026.
Carol Kong, a currency analyst at the Commonwealth Bank of Australia, said, “Warsh certainly appeared more inclined toward monetary tightening than expected, and the fact that he provided guidance on future hikes surprised markets, prompting them to reassess monetary policy toward tightening, which ultimately drove the dollar higher.”
The strength of the US currency pushed the euro down to $1.1456, near its lowest level in seven weeks, while the British pound stabilized at $1.3377 ahead of the Bank of England’s meeting later on Thursday.
The yen hovered around 156.20 against the dollar, near its lowest level in two weeks, as markets awaited the Bank of Japan’s decision on Friday.
The dollar index, which measures the performance of the US currency against a basket of other currencies, traded at 100.33 in its latest session, its strongest level since July 31.
Attention now turns to the Bank of Japan, which is expected to raise interest rates tomorrow to their highest level in 31 years and signal its readiness to continue raising borrowing costs, thereby joining other major central banks in combating persistent inflationary pressures driven by rising oil prices.
