U.S. dollar declines as Fed meeting begins

EUR USD Exchange Rate Fluctuates Ahead of Key Fed Policy Meeting

EUR USD Exchange Rate Fluctuates Ahead of Key Fed Policy Meeting

Treasuries tumbled while the dollar surged after the Federal Reserve struck a more hawkish tone than markets anticipated.

The Fed also announced it will slowly shrink its huge, economy-boosting $4.5 trillion balance sheet starting in October.

She also said if prices rose too quickly the bank would be able to lift rates quicker. But he declined to say what kind of options he was talking about or whether they involved the use of lethal force.

The greenback firmed to a 3-day high of 0.7946 against the aussie and a 2-day high of 0.7299 against the kiwi, off its early lows of 0.8036 and 0.7364, respectively.

The kiwi fell to 73.11 U.S. cents as at 8am in Wellington from 73.21 cents late yesterday. The euro was 0.2 percent higher at $1.1980. US stocks were little changed.

The dollar index, which tracks the greenback against a basket of currencies, held onto overnight gains to stand at 92.595 at 9:38 a.m. HK/SIN.

The U.S. dollar climbed against most major counterparts in early European deals on Thursday, as the Federal Reserve stuck to its plan for raising the interest rate again later this year and made a decision to begin the reduction of balance sheet from October. Some market participants thought damage from Hurricanes Harvey and Irma in Texas and Florida might force the Fed to postpone a rate increase until next year. Since December 2015, the Fed has modestly raised the rate four times.

An analyst noted that the prices are moving away because the market perceived the meeting's agenda and tone to be somewhat hawkish in terms of the forecasts and outlook for the interest hike. 13 meeting - up from 52% before the Fed's latest statement, according to CME Group. The index jumped to 87.9 from 86.7 off the back of recent solid growth figures for the second quarter and an increase in investment activities.

Asian shares slipped on Tuesday, hobbled by uncertainty as traders awaited a Federal Reserve meeting for clues on US monetary policy, though sentiment was supported by record highs on Wall Street.

On oil markets, both main contracts dipped following an nearly two per cent rally Wednesday on data showing United States gasoline stockpiles had fallen to a 22-month low. The Dow gained 63.01 points, or 0.3 percent, to 22,331.35.

The U.S. currency inched 0.1 percent lower against its Japanese counterpart to 111.45 yen. Late in the NY day, the American Petroleum Institute industry group said US crude stocks rose by 1.4 million barrels in the week to September 15.

ENERGY: Benchmark U.S. crude rose 24 cents to $50.15 a barrel. It rose to 81.56 yen from 81.24 yen and gained to 4.8126 yuan from 4.7954 yuan. The American Petroleum Institute had reported late Tuesday an increase of 1.4 million barrels.

The yen, often sought in times of geopolitical tensions, showed little reaction to U.S. President Donald Trump ordering new sanctions against North Korea on Thursday. While the interest rate outlook for next year remained largely unchanged in the Fed's latest projections, with three rises envisioned in 2018, the USA central bank did slow the pace of anticipated monetary tightening expected thereafter. On Wednesday, the loonie hit a 2-week low at C$1.2390 after the Federal Reserve signaled that it expected to raise interest rates once more by year-end.

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