US Dollar Index Fell despite the Fed’s Interest Rate Hike

But numerous explanations verge on fables: the economy is tanking, inflation is falling and the Fed is done with hikes.The U.S. 10-year Treasury note defines long-term interest rates here and worldwide.

Gold slipped 0.1 percent to $1,202.52 ahead of the Fed decision.

That is, the central bankers aren’t overly anxious about the US economy right now. However, despite comforting language within the statement we detected a more strategic, rather than data dependent, direction for United States interest rates in the press conference Q&A. In their ongoing shift from a “Fed put” to a “presidential put”, stocks have already been pricing in a Trumponomic-driven boost to economic growth, company earnings and the repatriation of corporate cash back to the U.S.

Gains in US oil production were triggered by the increase in crude oil prices that followed a production agreement from members of the Organization of Petroleum Exporting Countries. The rally in stocks? But the euro zone is a long way behind the US.

The euro edged up 0.2 percent to $1.0624 but remained below Monday’s more than 1 month high of $1.0714, while euro zone government bond yields dipped as investors opted for caution over valour.

Meanwhile, in Europe, politics were the focus in the past week with the Dutch incumbent, Mark Rutte routing the right wing extremist Geert Wilders in the national polls. Although we continue to see Emmanuel Macron defeating Marine Le Pen in the second round of polls, uncertainty will persist for the time being and we are still two months away from knowing who the victor will be.

Markets are also awaiting a meeting of the Group of 20 finance ministers and central bankers in the German town of Baden Baden starting on Friday, their first meeting since Donald Trump won the US presidential election.

Sources told Reuters hosts Germany will press G20 members to sign off on a set of principles including free trade at the gathering, in what the US administration may perceive as a challenge to its more protectionist stance. A March hike was a bit sooner than the market anticipated, but no matter: the S&P 500 gained 1.2 points that day, or 0.05%.

Luke Bartholomew, investment manager at Aberdeen Asset Management, said the rate announcement was roughly what investors were expecting, meaning financial markets should take the hike in their stride.

“The recovery seems to have gained some tailwind and we’re seeing growth start to accelerate globally and inflation pressures in the USA economy and overseas, so it is not surprising that the Fed followed through on their broadly signaled rate increase at this month’s meeting”, Tony Bedikian, head of global markets at Citizens Bank, said in a statement.

The index for all items less food and energy rose 0.2 percent in February.

Yellen emphasized during Wednesday’s press conference that monetary policy remains accommodative and that the Fed expects to continue with a gradual pace of normalization. In 2018 and 2019, core inflation is expected at 2%.

The abovementioned had sent the U.S. dollar nosediving, with the USD index down 1 big figure from 101.50 levels to 100.50 levels into Thursday Asian hours.