The US dollar held near a seven-week high on Thursday after the Federal Reserve raised interest rates and signaled the possibility of further increases in the coming months, while investors awaited interest-rate decisions from the Bank of England later on Thursday and the Bank of Japan on Friday.
The dollar strengthened sharply alongside US Treasury yields after newly appointed Fed Chair Kevin Warsh joined a unanimous decision to raise interest rates. Policymakers signaled further monetary tightening and projected another rate increase in 2026.
“Warsh certainly appeared more hawkish than expected, and the fact that he provided guidance on future rate increases surprised markets, prompting investors to reassess the monetary policy outlook toward tighter conditions, ultimately supporting the dollar,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
The strength of the US currency pushed the euro to $1.1456, near its seven-week low, while the British pound stood at $1.3377 ahead of the Bank of England’s decision later Thursday.
The yen hovered around 156.20 per dollar, close to its two-week low, as markets awaited the Bank of Japan’s policy decision on Friday.
The Dollar Index, which measures the US currency against a basket of major currencies, was last at 100.33, its highest level since July 31.
The Australian dollar stood at $0.7096, while the New Zealand dollar was steady at $0.5713.
According to CME’s FedWatch Tool, markets are currently pricing in roughly a 90% probability of another quarter-point US rate increase by the end of this year.
Attention is now turning to the Bank of Japan, which is expected to raise interest rates on Friday to their highest level in 31 years and signal its willingness to continue increasing borrowing costs. The move would align the Japanese central bank with other major central banks in addressing persistent inflationary pressures fueled by higher oil prices.
In cryptocurrencies, Bitcoin was steady at $76,562.25.
Source: Reuters
