Dollar wobbles after Fed pushes back against rate hike speculation

BENGALURU: The US dollar was on the defensive on Thursday after the Federal Reserve signaled it was in no hurry to raise interest rates through all of 2023 even as it saw a swift recovery in the world’s largest economy.
The dollar’s index against six major currencies stood at 91.488. It had hit a two-week low of 91.340 after remarks from Fed Chair Jerome Powell dampened speculation the stronger economic outlook could propel the central bank to wind back its stimulus.
The euro eased to $1.19655, but was hovering close to its one-week high of $1.19900 after rallying 0.6 percent on Wednesday.
“What the Fed said is a very market-friendly outcome. It’s negative for the dollar, good for inflation expectations,” said Chris Weston, the head of research at Pepperstone Markets, a foreign exchange broker based in Melbourne.
“Ultimately, the market was kind of positioned for something a little bit more hawkish, and maybe the fact that those rate hikes are pushed out to 2023 has been enough to cause some decent dollar selling.”
The US central bank now sees the economy growing 6.5% this year, which would be the largest annual jump in gross domestic product since 1984. Inflation is now expected to exceed the Fed’s 2 percent target to 2.4 percent this year, although officials think it will move back to around 2 percent in subsequent years.