After moving along the flat line since the start of the Asian session on Wednesday, the U.S. dollar climbed higher, scoring notable gains against most of its peers, after the Federal Reserve said it expects two rate increases by the end of 2023.
As widely expected, the Fed left interest rates unchanged and reiterated that its asset purchase program will continue at a $120 billion monthly pace until “substantial further progress” has been made on employment and inflation.
Fed Chair Jerome Powell said in a press conferene after the FOMC meeting that the central bank is monitoring economic data and has not made any decisions regarding its asset purchasing program.
Powell, who said inflation could run hotter than the central bank expected, added that the Fed will give advance notice before announcing a decision regarding tapering and that the timing will depend on the progress of economic recovery.
In other economic news from the U.S., data from the Commerce Department showed housing starts jumped by 3.6% to an annual rate of 1.572 million in May after plunging by 12.1% to a revised rate of 1.517 million in April. Economists had expected housing starts to surge by 3.9% to a rate of 1.630 million from the 1.569 million originally reported for the previous month.
A report from the Labor Department said import prices jumped by 1.1% in May after climbing by an upwardly revised by 0.8% in April. The report also said export prices spiked by 2.2% in May after surging by an upwardly revised 1.1% in April. Economists expected both export prices and import prices to move up by 0.8%.
The dollar index rose to 91.20 this afternoon, gaining nearly 0.75% from Tuesday’s close, after moving in a very tight band around 90.55 for much of the session till the announcement from the central bank.
Against the Euro, the dollar firmed to 1.2006, gaining more than 1% from $1.2128.
The Pound Sterling weakened against the dollar and fetched $1.3996 a unit, compared with $1.4086 Tuesday evening.
The Yen slid to 110.64 a dollar, giving up more than 0.5%.
Against the Aussie, the dollar firmed to $0.7614, gaining nearly 0.75% from 0.7687.
The Swiss franc, at 0.9082 a dollar, was down sharply from 0.8980 a dollar in the previous session.
The Loonie slid to 1.2261 from 1.2184 a dollar, sliding by more than 0.6%.