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FOREX-Dollar higher after Fed upgrades economic outlook

Wed, 16th Sep 2020 20:49

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Recasts with Fed, adds quotes, updates prices)
By Karen Brettell and Sinéad Carew
NEW YORK, Sept 16 (Reuters) - The U.S. dollar gained on
Wednesday in choppy trading after the Federal Reserve kept
interest rates pinned near zero and said it expects the U.S.
economic recovery from the coronavirus crisis to accelerate with
unemployment falling faster than the central bank expected in
The U.S. central bank said it would keep rates at rock
bottom levels until inflation is on track to "moderately exceed"
the U.S. central bank's 2% inflation target "for some time."

In new economic projections, Fed policymakers at the median
see economic growth dropping by 3.7% this year, an improvement
from the 6.5% drop projected in June.
"The Fed really underscored its dovish stance and how
inflation holds the key to the policy outlook. Overall it was
very dovish,” said Joe Manimbo, senior market analyst at Western
Union Business Solutions on Washington.
“But what's keeping a floor under the dollar so far is that
the Fed upgraded its economic forecast for GDP for 2020. The new
projection is -3.7%. That's not as bad as (the projection) from
June," he added.
The dollar index against a basket of currencies
gained 0.07% to 93.19. The euro fell 0.41% to $1.1797.
Stronger Chinese data for August on Tuesday had weighed on
the greenback as investors price for the prospect that other
regions will see a faster economic recovery from coronavirus
than the U.S.
"I would say the biggest impulse this week was the stronger
activity data for the month of August from China, and maybe a
bit of ongoing optimism about the vaccine," said Vassili
Serebriakov, an FX strategist at UBS in New York.
The Chinese data showed that industrial output accelerated
the most in eight months in August, while retail sales grew for
the first time this year.
"People are starting to embrace a new theme, which is that
China is managing much, much better than anyone else," said
Davis Hall, head of capital markets in Asia at Indosuez Wealth
The offshore yuan gained to 6.7426, the strongest
since May 2019.
The safe-haven Japanese yen hit a two-and-a-half
month high of 104.81 against the greenback.
"The main tailwind for the yen is political uncertainty at
home. The surprise departure of Abe has put a persistent bid
into the yen as Japanese investors pull back on risk," said Adam
Button, chief currency analyst at ForexLive in Toronto.
Japan's new Prime Minister Yoshihide Suga pledged on
Wednesday that he will do his best to protect employment while
also countering the coronavirus.

Currency bid prices at 3:30PM (1930 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Euro/Dollar EUR= $1.1797 $1.1845 -0.41% +5.24% +1.1882 +1.1789
Dollar/Yen JPY= 105.0100 105.4300 -0.40% -3.54% +105.4400 +104.8100
Euro/Yen EURJPY= 123.90 124.91 -0.81% +1.60% +125.0100 +123.8600
Dollar/Swiss CHF= 0.9106 0.9080 +0.29% -5.91% +0.9111 +0.9056
Sterling/Dollar GBP= 1.2949 1.2886 +0.49% -2.34% +1.3006 +1.2876
Dollar/Canadian CAD= 1.3177 1.3181 -0.03% +1.47% +1.3200 +1.3127
Australian/Doll AUD= 0.7286 0.7301 -0.21% +3.77% +0.7345 +0.7286
Euro/Swiss EURCHF= 1.0744 1.0756 -0.11% -1.00% +1.0766 +1.0739
Euro/Sterling EURGBP= 0.9110 0.9190 -0.87% +7.76% +0.9208 +0.9095
NZ NZD= 0.6720 0.6721 -0.01% -0.24% +0.6758 +0.6703
Dollar/Norway NOK= 9.0355 9.0285 +0.08% +2.93% +9.0560 +8.9714
Euro/Norway EURNOK= 10.6590 10.6990 -0.37% +8.35% +10.7187 +10.6449
Dollar/Sweden SEK= 8.8166 8.7894 -0.13% -5.68% +8.8221 +8.7648
Euro/Sweden EURSEK= 10.4011 10.4150 -0.13% -0.65% +10.4320 +10.3870

(Additional reporting by Julien Ponthus in London; Editing by
Sandra Maler and Nick Zieminski)

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