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MW: Dollar continues to climb on September hike hopes
 
The dollar rose against most other major currencies on Thursday, encouraged by what investors interpreted as a slightly hawkish statement from the Federal Open Market Committee in deciding when to raise short-term rates.

The greenback USDJPY, +0.28% advanced to ÂĄ124.26, its highest since July 21, up from ÂĄ123.94 late Wednesday in New York. The U.S. currency EURUSD, -0.1274% also strengthened against the euro, which fell to $1.0965 from $1.0986 in New York overnight.

The WSJ Dollar Index BUXX, +0.22% a measure of the dollar against a basket of major currencies, was up 0.2% at 88.40, while the ICE dollar index DXY, +0.11% put on 0.2% to 97.209.

The upbeat trading mood in the dollar followed a positive session on Wednesday, when the Fed left its benchmark short-term interest rate near zero, but dropped several hints that it is close to seeing enough improvement in the job market to prompt officials to raise the rate as early as September.

Hilsenrath: Fed on course for September rate rise (3:56)
Jon Hilsenrath has analysis of the Federal Reserve's move to keep rates near zero. The Fed cited continued improvement in the U.S. job market as an indication a September rate increase is likely.

For months, Fed officials have said they wanted to see “additional improvement in the labor market” before being convinced it is time to raise rates. In Wednesday’s statement, they said they wanted to see “some” additional improvement, suggesting they see themselves nearing their threshold on the jobs front for action.

“They didn’t say it clearly but investors can slightly smell (a rate increase) in September,” said Koji Fukaya, chief executive at FPG Securities.

Read: Resolved maybe, Fed will raise rates in September

Higher interest rates in the U.S. are expected to increase demand for the dollar, and the greenback has recently moved higher on expectations the first monetary tightening will come in 2015.

Second-quarter gross-domestic-product numbers due Thursday at 8:30 a.m. Eastern Time could further impact the case for a rate hike, analysts said.

“The U.S. is expected to have grown 2.6% in the last quarter, which under the circumstances is neither anything to write home about or something to panic over,” said Craig Erlam, senior market analyst at Oanda, in a note.

“I think the Fed would like to see a stronger rebound from the first quarter, although one of the key headwinds remains — strong dollar — as we’re seeing in company earnings at the moment,” he added.

In other currencies, the pound GBPUSD, +0.1282% rose to $1.5621 from $1.5604 late in New York on Wednesday.
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