Some economists expect a rate hike becomes in December.
Wells Fargo said “On balance, we take today’s policy statement and economic outlook as still supportive to a Fed rate hike before year’s end–our call, December. Clearly, several Fed members are growing increasingly uncomfortable with rates at the current level and may be worried that the long runway to December presents risk that a planned rate hike could be shelved once again.”
"While the Federal Reserve held rates unchanged, the highly unusual 7-3 vote points to the depth of its policy dilemma and makes a December hike more likely," said Mohamed El-Erian, chief economic adviser at Allianz.
Dollar Traders Look Past Fed Hawks to Canvas of Dovish Dots
Dollar bulls banking on the Federal Reserve to signal at least one interest-rate increase by year-end got their wish -- and were still disappointed.
The currency slid against almost all of its major peers Wednesday after the U.S. central bank left its policy rate unchanged and projected a boost by year-end. That’s because it also scaled back the outlook for increases in 2017 and beyond. For dollar bulls, it was yet another in a series of disappointments this year as the Fed again stood pat, undermining bets the greenback would strengthen while central banks in Japan and Europe further debased their currencies with stimulative policies.
The Fed’s “dot plot,” which it uses to signal its policy outlook, shows that officials expect one quarter-point rate increase this year, followed by just two next year. In January, policy makers were calling for four hikes this year followed by another four in 2017. The announcement further dims the outlook for the dollar after a more than 20 percent surge since the middle of 2014 gave way to a 4 percent slide this year.
The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, slid 0.7 percent on Wednesday and a further 0.2 percent on Thursday as of 6:29 a.m. in London.
Japan MOF Asakawa: Will take necessary action if speculative moves seen in yen
Japan's top currency diplomat said on Thursday that Japanese financial authorities are watching for speculative currency market moves and would respond if needed.
Masatsugu Asakawa, vice finance minister for international affairs, said "We are worried that there are nervous moves in the currency market."
He added that authorities will continue to monitor the currency market in the evening even more carefully than usual.
"If speculative moves continue to be seen, we are ready to take necessary action," he said.
Oil prices climb on weaker dollar, after U.S. crude stock draw
Oil prices rose on Thursday, lifted by a weaker dollar and extending gains from the previous session when a surprise third consecutive weekly U.S. crude inventory draw tightened supply.
U.S. West Texas Intermediate (WTI) crude oil futures CLc1 were trading at $45.76 per barrel at 0659 GMT (02:59 a.m. EDT), up 42 cents, or 0.9 percent, from their previous close. The contract gained as much as 3 percent the day before.
Reference: Wells Fargo, Reuters,Bloomberg, Reuters
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