The US Dollar Index is trading close to the 10-week high reached during the previous session. The index measures the performance of the greenback against a basket of other major currencies, and its gains reflect a bullish market reaction following the first Federal Reserve meeting chaired by Kevin Warsh. As expected, the central bank kept interest rates on hold, but its stance became more hawkish, with no members of the committee voting in favour of a rate cut. The policy statement also included a strong commitment to delivering price stability and references to the strength of the economy. In essence, the message taken by the markets is that the Fed sees inflation as a problem that extends beyond energy prices and is determined to bring it under control. As a result, the vast majority of traders now expect the next move to be a rate hike before the end of the year, although it could come as early as September. Against this backdrop, there may be scope for further gains in the US dollar.
Ricardo Evangelista, ActivTrades
Source: ActivTrader
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