Dollar Struggles as Fed Keeps Rate Hike Path at 3

The U.S. dollar wallowed against its major trading partners this morning during Asian trade hours. This was due to the Federal Reserve sticking to its plan that it would raise interest rates three times in 2018. Traders were hoping for four rate hikes this year.

The Federal Reserve, as expected, raised its fed funds rate by 25 basis points to 1.75 percent, on Wednesday. They also laid out a forecast of at least two more hikes for 2018. The fed highlighted its growing confidence that tax cuts and government spending will boost the world’s largest economy. Also, the tax cuts would boost inflation and spur aggressive future monetary policy tightening.

The U.S. central bank also projected three rate hikes in 2019.

The dollar, after the news, fell lower. Investors who had bet on the Fed would call for four rate increases in 2018 instead of the three already anticipated took profits after the announcement.

The U.S. dollar index , which tracks the sawbuck against a basket of six currencies, was down by 0.3 at 89.520. It had fallen by 0.7 percent, overnight, in North American trade hours.

Dollar and Forex traders now eye the Bank of England

The Bank of England’s monetary policy meeting will be held on Thursday. This is now in focus. Forex market traders are keeping a close eye on the central bank’s policy views. There was solid British wage data which has reinforced expectations that the central bank will raise rates by May.

The GBP/USD Forex market, extended its rally and rose at a six week high at $1.4163.

The USD/JPY was down 0.3 percent at 105.715 yen. It had fallen nearly 0.5 percent the previous day. The EUR/USD was up 0.2 percent to $1.2365. This follows a gain of 0.8 percent overnight.

There is still concern among currency traders about a possible trade war between China and the U.S. This will play a factor with volatility.