Dollar picks up after Fed boosts view on economy

The dollar picked up Thursday after the Federal Reserve boosted its view of the US economy, with analysts saying it has left the door open for a possible interest rate hike as early as September.

Tokyo: The dollar picked up Thursday after the Federal Reserve boosted its view of the US economy, with analysts saying it has left the door open for a possible interest rate hike as early as September.

In Tokyo, the dollar traded at 124.17 yen, up from 123.91 yen in New York and 123.64 yen in Tokyo Wednesday before the Fed finished a two-day policy meeting.

The euro slipped to $1.0972 from $1.0990, while it edged up to 136.23 yen from 136.19 yen.

The greenback came under selling pressure this week as a plunge on Chinese shares renewed fears of another rout in the markets of the world`s number two economy, sending investors running for safer investments.

But it bounced back after the Fed said the US economy had expanded "moderately" in recent months and the jobs market strengthened, though it noted continued "soft" business investment and exports.

It also said inflation was below target but put much of that down to falling energy prices and to cheaper imports caused by the strong dollar.

While it gave no more clues about its plans for raising interest rates, analysts said the wording suggested September was now a strong possibility for a rate rise.

Policymakers said that "the labour market continued to improve, with solid job gains and declining unemployment", adding that a rate hike would come after they see a further uptick in the jobs figures.

Raiko Shareef, a markets strategist at Bank of New Zealand in Wellington told Bloomberg News: "The Fed statement was similar to the last and it was a very modest upgrade to previous language.

"That will make the two following employment reports we get more important, and strong results would support our view of a September liftoff."

Investors are now awaiting the release later Thursday of second-quarter US growth data, with expectations for a recovery from the previous three months` 0.2 percent contraction.

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