Trending
US Dollar
Source: Newsmaker.id
The US dollar index strengthened to a seven-week high during Thursday's trading (Sept. 17) after the Federal Reserve raised interest rates and reaffirmed its commitment to curbing inflation. The dollar index briefly touched the 100.36 level—its highest since July 31—before easing slightly to around 100.20 as falling energy prices began to alleviate market concerns regarding supply disruptions.
The Fed raised interest rates by 25 basis points and signaled that further hikes would be necessary to keep inflation in check. Fed Chair Kevin Warsh also emphasized the importance of central bank independence, despite facing prior pressure from US President Donald Trump, who had pushed for significantly lower interest rates.
The market viewed the Fed's decision as a signal that US monetary policy would remain on a tightening path. The central bank's latest projections indicate the likelihood of one additional hike this year, though investors are still factoring in the possibility of more aggressive tightening, given that inflation and energy prices remain key risks to the economy.
Meanwhile, weakening oil prices exerted some pressure on the dollar after reports of additional oil shipments from Saudi Arabia via Oman helped ease supply disruption fears. The drop in energy prices also influenced major currency movements; the euro strengthened slightly to around US$1.1475 after previously hitting a seven-week low. The pound sterling weakened after the Bank of England held interest rates steady but warned of inflation risks stemming from the conflict in the Middle East.
Market attention is now shifting to the Bank of Japan (BoJ) decision, with the central bank expected to raise interest rates to a 31-year high on Friday. Expectations of policy normalization in Japan helped support the yen, pushing the USD/JPY pair down approximately 0.43% to the 155.65 level. Investors are also closely watching for potential shifts in Japanese domestic investment flows, should rising yields encourage funds to return to the home market.
Newsmaker Analysis: The dollar's strengthening following the Fed's decision indicates that the market remains keenly focused on the direction of US monetary policy. As long as the Fed maintains a hawkish stance and inflation fails to show a consistent decline, the dollar is likely to remain supported. However, risks to the dollar persist, stemming from political pressure on the Fed's independence and policy shifts by other central banks—particularly if the Bank of Japan (BoJ) accelerates its interest rate normalization. (arl)
Source: Newsmaker.id