The Federal Reserve’s (Fed) hawkish statement on interest rate hikes has prompted a surge in U.S. dollar trading and plunged most major currencies lower in the Asian session.
Following the FOMC policy meeting that took place early this morning, the Fed gave an indication that interest rates may be raised in March when their bond -buying program ends.
Not only that, but the Fed also said the willingness of policymakers to move more aggressively in combating the U.S. inflation surge which is now at its highest level in nearly 40 years.
This has driven the US dollar to a five -week high, with the dollar index trading stronger at around 96.56 against most major currencies.
The rise also followed an increase in US 10 -year bond yields to around a 2 -year high of 1.88% which increased due to the Fed's confidence in current economic growth and the impact of the Omicron variant was only temporary.
Meanwhile, euro trading slumped lower with price movements approaching two -month lows. The pound plunged to a three -week low against the USD.
In addition, the strengthening of the US dollar also pushed the Aussie dollar to a one -month low, and the kiwi is the lowest since November 2020.
Investors ’focus is now shifting to preliminary readings of US Gross Domestic Product (GDP) data for the fourth quarter of unemployment claims data in today’s New York session.
