Dollar down as Fed's rate-hike cycle seen ending
By Rae Wee
SINGAPORE (Reuters) — The dollar fell on Thursday after the Federal Reserve delivered what some expected to be its last rate hike, while market focus shifted across the Atlantic to the European Central Bank's (ECB) rate decision later in the day.
The Fed on Wednesday raised interest rates by a quarter of a percentage point, as expected, marking the central bank's 11th rate increase in its last 12 meetings.
While Fed Chair Jerome Powell left the door open to another hike in September, traders were unconvinced, sending the U.S. dollar sliding in Asia trade on Thursday.
That pushed the risk-sensitive Australian and New Zealand dollars higher, as the prospect that the global monetary tightening cycle could soon be ending boosted sentiment.
The New Zealand dollar was last 0.8% higher at $0.6259, having earlier surged more than 1% to a one-week high of $0.6274.
The Aussie similarly jumped nearly 1% to a one-week top of $0.68195.
«Of course, the Fed did not close the door to further rate hikes, but it seems like in the Asian session, people took a firm conviction that this could be the last hike for the Fed,» said Bank of Singapore currency strategist Moh Siong Sim.
The dollar index fell 0.3% to 100.81, while sterling touched a one-week high of $1.29735 earlier in the session.
The British pound was last 0.19% higher at $1.2964.
"(The) U.S. is closer to the end of the hiking cycle than its peers. A dovish pivot from the Fed will likely exert a downward pressure on the U.S. dollar in the medium term," said Emin Hajiyev, senior economist at Insight Investment.
The ECB comes under the spotlight next, with investors expecting the central bank to similarly raise rates by 25 bps at the conclusion of its monetary policy
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