September 26, 2018 / 1:51 AM / 3 months ago

Dollar rises after Fed raises rates, flags more hikes

NEW YORK (Reuters) - The dollar edged higher on Wednesday in choppy trading after the Federal Reserve raised interest rates as expected for the eighth time, flagged more rate hikes and signaled the end of the “accommodative” policy era.

FILE PHOTO: A U.S. Dollar note is seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo

The greenback briefly fell against the euro and yen after the release of the Fed statement but slowly inched higher as market participants digested the statement.

Fed policymakers lifted the benchmark overnight lending rate by a quarter of a percentage point to a range of 2.00 percent to 2.25 percent. The central bank also removed from its policy statement a description of monetary policy as remaining accommodative.

“Today’s dropping of keyword ‘accommodative’ from its policy statement ensures the Fed remains on course for further hikes as unemployment heads towards multi decade lows,” said Robert Sierra, director at Fitch Ratings.

“The Fed continues to be very much focused on strong domestic conditions and neither trade concerns nor recent emerging market turbulence affected today’s decision,” he added.

For Mark McCormick, head of North American FX strategy, at TD Securities in Toronto, however, the removal of the word “accommodative” is a dovish signal and was the reason for the initial fall in the dollar.

“To me, it means that the Fed is more or less in a neutral stance and is probably close to being done raising rates,” McCormick said.

Federal Reserve Chairman Jerome Powell clarified that the removal of “accommodative” in the statement is a sign that monetary policy is proceeding in line with expectations.

In afternoon trading, the dollar index, which measures the U.S. unit against six major currencies, was up 0.1 percent at 94.179

The euro briefly hit session highs versus the dollar after the decision, before falling to $1.1734, down 0.3 percent.

Against the yen, the dollar rose was up slightly at 113.01 yen.

In the statement, the Fed still foresees another rate hike in December, three more next year, and one increase in 2020.

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Currency bid prices at 1451 EDT (1851 GMT):

Description RIC Last U.S. Pct YTD High Bid Low Bid

ClosePre Change PctChan

vious ge

Session

Euro/Dollar EUR= $1.1744 $1.1771 -0.23 -2.10 +1.1797 +1.1727

Dollar/Yen JPY= 112.9600 112.9700 -0.01 +0.26 +113.1300 +112.7500

Euro/Yen EURJPY= 132.69 132.91 -0.17 -1.84 +133.0900 +132.5300

Dollar/Swiss CHF= 0.9662 0.9649 +0.13 -0.82 +0.9701 +0.9624

Sterling/Dollar GBP= 1.3168 1.3181 -0.10 -2.55 +1.3217 +1.3139

Dollar/Canadian CAD= 1.3015 1.2951 +0.49 +3.48 +1.3025 +1.2944

Australian/Doll AUD= 0.7260 0.7250 +0.14 -6.94 +0.7314 +0.7241

ar

Euro/Swiss EURCHF= 1.1351 1.1352 -0.01 -2.89 +1.1385 +1.1342

Euro/Sterling EURGBP= 0.8916 0.8924 -0.09 +0.37 +0.8945 +0.8902

NZ NZD= 0.6653 0.6645 +0.12 -6.11 +0.6694 +0.6636

Dollar/Dollar

Dollar/Norway NOK= 8.1054 8.1277 -0.27 -1.24 +8.1375 +8.0832

Euro/Norway EURNOK= 9.5216 9.5647 -0.45 -3.32 +9.5694 +9.5170

Dollar/Sweden SEK= 8.8060 8.8071 -0.22 +7.37 +8.8416 +8.7846

Euro/Sweden EURSEK= 10.3434 10.3660 -0.22 +5.13 +10.3826 +10.3420

Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette Baum and Cynthia Osterman

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