After yesterday’s Fed decision to raise rates but cut its 2019 forecast, the dollar dipped against its major peers Thursday morning. The GBP/USD hit levels last seen in early December as Brexit takes a backseat and retail sales surprise on the upside.
Greenback loses as markets digest Fed decision
The dollar lost its momentum from the Federal Reserve rate hike yesterday as investors started to evaluate the impact of the 2019 forecast cuts.
The FOMC raised rates for the fourth time this year to 2.5%, but cut its 2019 outlook from three hikes to two.
The greenback initially gained on the news, but it was down across the board this morning. The EUR/USD pair hit 6-week highs on the dollar selloff and quieter times in Eurozone politics. The pair then dropped from 1.148 to 1.145.
The USD/JPY fell the most, with the pair nearing 111.5 after pushing up against 114.0 earlier this week.
Pound gets a boost
Sterling advanced Thursday morning off of a combination of factors, including the weaker dollar, Brexit on the back burner, the Bank of England decision, and better-than-expected retail sales.
The BoE, as expected, decided to hold interest rates steady at 0.75%. The November retail sales for the U.K. were an added bonus to the morning, greatly beating estimates.
The headline figure hit 3.6% growth compared to 1.9% expected. Excluding fuel, retails sales also hit 3.8% growth YoY instead of 2.3%.
The GBP/USD rose above 1.270 this morning, but fell back to 1.265 as the markets corrected.
The Senate passed stopgap funding to avoid a partial government shutdown until Feb. 8 – and also to avoid a confrontation with President Trump over the border wall before Christmas.
The House is set to vote on the bill today and then it would go to Trump for his signature. Previously, President Trump said he would be happy to shut down the government over the wall, but it seems as though he would be willing to sign the temporary funding and address the issue in the New Year.