Dollar Higher after Fed, Pound Slips Before BoE

On Thursday, The dollar was higher against a currency basket  after the Federal Reserve indicated that it is on track for additional rate hikes this year, while the pound slipped ahead of the Bank of England’s policy announcement later in the day.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.21% to 94.66 by 02:52 AM ET (06:52 AM GMT).

Demand for the dollar continued to be underpinned after the Fed kept interest rates unchanged as widely expected at the conclusion of its policy meeting on Wednesday, and said U.S. economic growth has been rising strongly and the job market has continued to strengthen.

The dollar was also supported by safe haven demand amid renewed concerns over global trade tensions.

The Trump administration indicated Wednesday that it is planning to increase tariffs on $200 billion worth of Chinese imports to 25% after initially setting them at 10%, escalating a trade conflict between the world’s two largest economies.

The euro was lower against the dollar, with EUR/USD sliding 0.21% to 1.1634.

The dollar was a touch lower against the yen, with USD/JPY dipping 0.09% to 111.62, but still held on to most of its gains made on Tuesday after the Bank of Japan pledged to keep interest rates very low for the time being, even as it made small adjustments to its asset purchase program to make it more flexible.

The pound was lower, with GBP/USD down 0.28% to 1.3090 ahead of the conclusion of the BoE’s meeting later Thursday, at which it was widely expected to deliver its second rate hike in a decade, despite a weakening outlook for the UK economy and deepening uncertainty over Brexit.

The risk sensitive Australian dollar was lower, with AUD/USD down 0.3% to 0.7383. The Aussie is seen as a proxy for Chinese growth because of Australia’s export-reliant economy.

The New Zealand dollar was also lower, with NZD/USD losing 0.28% to trade at 0.6773./investing.com

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