U.S. Dollar Ticks up on Fed’s Signal to Raise Rates

FILE PHOTO: An employee counts U.S. dollar bills at a money exchange in central Cairo, Egypt, March 20, 2019. REUTERS/Mohamed Abd El Ghany
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The U.S. dollar strengthened on Wednesday after the Federal Reserve signaled determination to raise interest rates after the pause in June.

The dollar index, which measures the greenback against six major peers, was up 0.32 percent to 103.3727 in late trading.

According to minutes for June’s meeting of the Federal Open Market Committee issued on Wednesday, almost all participants noted in their economic projections that they judged “additional increases in the target federal funds rate during 2023 would be appropriate.”

Fed members also upgraded their rate hike forecast, estimating a terminal rate or peak rate of 5.6 percent at the midpoint in 2023, up from a prior forecast of 5.1 percent seen in March, suggesting two more hikes ahead.

The benchmark U.S. 10-year Treasury rose by more than 8 basis points to 3.941 percent at one point, while the yield on the 2-year Treasury was at 4.945 percent, closer to a 52-week high of 5.084 percent, after release of the minutes.

Moreover, the fall across global equity markets on Wednesday also drove up demand for the U.S. dollar.

In late New York trading, the euro was down to 1.0853 dollars from 1.0887 dollars in the previous session, and the British pound fell to 1.2694 dollars from 1.2719 U.S. dollars in the previous session.

The U.S. dollar bought 144.6680 Japanese yen, higher than 144.4930 Japanese yen of the previous session. The U.S. dollar was up to 0.8989 Swiss francs from 0.8968 Swiss francs, and it was up to 1.3280 Canadian dollars from 1.3224 Canadian dollars. The U.S. dollar rose to 10.9464 Swedish Krona from 10.8142 Swedish Krona.