USD - United States Dollar
Demand for the US dollar surged after the US Federal Reserve signaled it might raise interest rates earlier than they had anticipated. USD gained against all major currencies on the news, hitting two-month highs. The US Dollar Index climbed 0.58% to 91.66 at the time of writing.
For individuals and businesses planning to transfer US dollars to euros, pounds, Australian dollars or New Zealand dollars, now could be a good time.
Fed policymakers have moved the timeline on when they would consider an interest rate hike significantly forward. Up until yesterday, the central bank maintained that rates in the US would stay close to zero through 2024. But there is now an expectation that there could be two rate hikes in 2023.
The central bank maintained that they believe the 5% inflation reading is 'transitory', and that inflation will tail off over time, but they have raised their inflation target by a whole percentage point to 3.4%.
The Fed announcement knocked down the pound over 1%. GBPUSD moved below the psychological 1.40 level. The news also had knock-on effects on the euro, which has helped GBPEUR edge slightly higher.
The four-week delay to the end of UK lockdown restrictions have also kept pressure on the pound. With inflation on the rise in the UK, there is speculation that the Bank of England may have to tighten monetary policy sooner than it initially anticipated. This may govern movement with the pound in the coming months.
Commodity currencies like the Australian dollar, New Zealand dollar and Canadian dollar also fell. AUDUSD was down 0.62% to 0.7561, NZDUSD was down 0.64% at 0.7007 and USDCAD traded at 1.2320 at the time of writing.
1.1928 - 1.2126 ▼GBP/USD:
1.3929 - 1.4113 ▼AUD/USD:
0.756 - 0.7713 ▼USD/CAD:
1.2159 - 1.2344 ▲