The dollar pared earlier losses on Thursday after the U.S. Federal Reserve sounded close to calling time on interest rate hikes, while the Swiss National Bank and Bank of England pushed ahead with further rate increases.
The Fed raised its benchmark funds rate 25 basis points on Wednesday, but dropped language about “ongoing increases” being needed in favor of “some additional” rises.
The Fed’s hike was notable given that financial markets have been roiled by wavering confidence in banks globally following a run on Silicon Valley Bank two weeks ago and the sudden demise of Credit Suisse.
The dollar index, which measures the currency against six major peers, was last up 0.078% at 102.510, set for its first winning day after five straight days of losses.
Markets are betting on just one more quarter-point hike from the Fed, in contrast to Europe where markets see around 50 bps of further tightening.
The gap sent the euro surging to a seven-week high of $1.0930, before moving downward. It was last at $1.08480.
The Bank of England raised borrowing costs by 25 bps on Thursday, in line with expectations, and said further tightening would be required if there were evidence of more persistent price pressures.
Sterling gained 0.13% against the dollar to $1.22845.
The Swiss National Bank (SNB) also raised its policy rate by 50 basis points as the central bank sought to balance tackling inflation with concerns about financial market turmoil.
The SNB said measures announced by authorities at the weekend regarding Credit Suisse had “put a halt to the crisis.”
The dollar fell against the franc after the decision and was last down 0.19% at 0.916.
https://money.usnews.com/investing/news/articles/2023-03-22/dollar-slips-as-fed-outlook-shifts
