Greenback underperforms after FOMC rate hike, other banks hesitant to make changes.

Posted on 2017-03-17 15:21   Tags: USD   Trump   Central   Bank   EURUSD  

 As expected, the FED came through with their plan to up the overnight borrowing rates to 1% from the previous 0.75%. While this was nothing out of the ordinary, the USD price went down sharply after the announcement. The USD Dollar Index – a measurement of the strength of the American currency versus a basket of other foreign currencies went down shortly after the news broke out. It now stands at 100.09, a decrease of 1.33% from previous levels. The Dollar has also lost value against the Euro (-1.22%), Yen (-0.95%) and the Loonie (-0.98%). At the same time the gold went up 2.1% against the Greenback. A few reasons could be pointed out, such as a lack of change in rate projections, no change in the near future economic outlook, as well as an increase in the price of the corresponding currencies themselves. By current projections, 2 more rate hikes are to be made this year and it remains to be seen if the measures can reassure the market that the taken steps are the correct ones or if the USD will continue to fall.

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