Yesterday, the US Dollar remained on the defensive, having tumbled after the Federal Reserve raised for the third time this year its key short-term rates by 0.25% to a range of 1.25-1.5%. Given the broad expectations for the rate hike, the market has been focused on changes in the “dots” plot and anything implied by the updated economic projections. The Fed kept its 2018 and 2019 rates outlook unchanged, with an additional three hikes in 2018 and a further two in 2019. However, some analysts see hopes for progress on US tax reform, including tax cuts, lending support to the Dollar. Congressional Republicans reached a deal on final tax legislation yesterday, clearing the way for final votes next week on a package that would slash the US corporate tax rate to 21% and cut taxes for wealthy Americans.
On Wednesday, the British Pound rose ahead of the Bank of England (BoE) policy meeting, which was closely watched for clues on the future path of UK monetary policy.
On Tursday as well, the Australian Dollar edged higher and hit a one-month high of $0.7675 early, after the release upbeat data. Australian employment surged in November, rising the most in more than two years. The number added 61,600 as net new jobs last month, compared with forecasts for an 18,000 rise. Furthermore, the unemployment rate stayed at 5.4%, the lowest since February 2013, as more people went looking for work.