Daily Morning Report 21.09.2017

The dollar climbed against other major currencies on Thursday, after the Federal Reserve signaled the possibility for an additional rate hike before the end of the year and began winding down its stimulus program.

As expected, the Fed left interest rates unchanged at the conclusion of its two-day policy meeting on Wednesday.

However, the central bank indicated that one more interest rate hike is likely this year, even though it reduced its outlook for inflation from 1.7% this year to 1.5%, and from 2% to 1.9% in 2018.

The Fed also said it will begin to roll off its $4.5 trillion balance sheet in October. Most assets consist of the Treasurys and mortgage-backed securities it acquired under the bank’s quantitative easing program.

EURUSD slipped 0.13% to a one-week low of 1.1877, while GBPUSD held steady at 1.3487.

The yen was lower, with USDJPY up 0.23% at 112.50, its highest since July 18.

Earlier Thursday, the Bank of Japan also left its monetary policy unchanged, in line with market expectations. However, a dovish new board member opposed the decision in his first meeting.

Elsewhere, NZDUSD declined 0.49% to trade at 0.7323, off the previous session’s six-week high of 0.7390.

Statistics New Zealand earlier reported that gross domestic product expanded by 0.8% in the second quarter, in line with expectations. The previous quarter’s growth rate was upwardly revised from 0.5% to 0.6%.

Year-on-year, New Zealand’s economy grew 2.5% in the last quarter, as expected.