Dollar slips as Fed's rate-hike cycle seen ending

economictimes.indiatimes.com:

dollar was on the back foot 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 broadly lower. The dollar index was last 0.04% lower at 101.06, away from a two-week top of 101.65 hit earlier in the week, though its losses were muted as money markets had already priced in Wednesday's 25-basis-point increase. Sterling steadied at $1.2935, having eked out a slight gain against the dollar in the previous session.

«Another hike over the coming months is possible but we would also not rule out (Wednesday's) meeting marking the end of the hiking cycle,» said Emin Hajiyev, senior economist at Insight Investment. "(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." 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 meeting later on Thursday, with focus on its forward guidance. Ahead of the rate decision, the euro firmed at $1.1083.