Fed & ECB Meetings Boost US Dollar

The US dollar was strong for the most part of the week, boosted by policy meetings of the Federal Reserve and the European Central Bank, though the currency weakened somewhat on Friday.

Fed and ECB policy meetings were the focus of the past trade week. The Fed hiked interest rates, in line with expectations. What really surprised markets was the projection of two more hikes this year instead of just one, promised in the previous forecasts. Meanwhile, the ECB disappointed markets, saying that no rate hike is likely until mid-2019.

The dollar jumped on the news, especially after the ECB announcement, but retreated a bit on Friday amid signs that the US-China trade war is intensifying. Markets demonstrated muted reaction to the news, though, and the drop of the greenback was limited.

EUR/USD dropped from 1.1773 to 1.1605 over the week. GBP/USD declined from 1.3411 to 1.3279. USD/JPY rose from 109.28 to 110.64.

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