First US rate rise in decade sends dollar to 2-week high

In a well-anticipated move the Fed raised the range of its benchmark interest rate by a quarter of a percentage point to between 0.25 percent and 0.50 percent, ending a prolonged debate about whether the economy was strong enough to withstand higher borrowing costs.

That stoked expectations that the Fed will hike interest rates for the first time in almost a decade, increasing the lure of the U.S. dollar.

“The focus is whether the market and Fed will be on the same page about the next rate hike and beyond”, said Masaru Hamasaki, head of market & investment information department at Amundi Japan.

“We wouldn’t be surprised if we see our market get sold off towards the close as investors look to close their positions ahead of the USA interest rate decision”, said Anthony D’Paul, chief executive of Australian Stock Report. The euro was last down 0.24 per cent against the greenback at $1.09070.

The Dow .DJI gained 1.3 percent and the S&P 500 .SPX rose 1.5 percent overnight.

GBP to USD Exchange Rate Stands at around 1.5051The US DOLLAR (currency: USD) has lost a little ground against Sterling during the past couple of weeks; however, the move against the Buck looked to be nothing more than positioning from speculators and the vast majority of analysts forecast that an increase in US yields tonight would see the Buck perform on a POSITIVE footing in the short to medium term.

Reflecting the dollar’s broad gains after the Fed hike, the People’s Bank of China set its official yuan midpoint rate at a new 4-1/2-year low. The central bank has hinted that it intends to hike rates gradually.

MELBOURNE, Dec 17 (Reuters) – London copper slipped on Thursday after the Federal Reserve’s first rate hike in nearly a decade pushed up the dollar, though greater confidence in a global economic recovery should help to firm up a floor for prices.

It advanced 0.5 percent 67.62 USA cents per New Zealand dollar and 0.4 percent to 72.07 cents against Australia’s currency.

“We expect the (Federal Open Market Committee) to emphasise that its tightening cycle will be gradual”.

Brent crude LCOc1 fell more than 3 percent on Wednesday, after USA government data showed a big build in crude inventories.