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Title: Dollar Down as Investors Digest Fed Policy Decisions

Jun 16, 2022 01:01AM ET

By: AnalysisWatch

The dollar fell in Asia on Thursday morning as investors digested the 75 basis point interest rate hike announced by the Federal Reserve on Wednesday.

The dollar index, which tracks the greenback against a basket of other currencies, was up 0.15 percent to 104.780 by 12:57 p.m. EDT

The USD/JPY pair rose 0.42 percent to 134.30. The Bank of Japan will also announce its monetary policy decisions on Friday.

The AUD/USD pair rose 0.15% to 0.7013 and the NZD/USD pair rose 0.14% to 0.6293.

The USD/CNY pair fell by 0.18% to 6.7015 and the GBP/USD pair by 0.24% to 1.2147.

The U.S. Federal Reserve raised interest rates by 75 basis points on Wednesday to curb inflation after the U.S. consumer price index rose 8.6% year-on-year in May, the most since 1994.

Fed Chairman Jerome Powell said the central bank will make another big rate hike in July, but "today's 75 basis point increase is unusually large and I don't expect moves of this magnitude to be common."

It's pretty clear that the Fed will do everything it can to force inflation lower, and the final rate will be closer to 4% and possibly higher," Peter Yi, head of short fixed income and head of credit research at Northern Trust Asset Management, told Bloomberg.

The Fed also announced plans to shrink its balance sheet by $47.5 billion a month, starting June 1 and increasing to $95 billion in September.

Investors are now awaiting the Bank of England's (BOE) monetary policy decision, which is expected later today.

On the data front, US housing starts and initial jobless claims are expected to be released later in the day.

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