US dollar stays strong after Fed move

The US dollar pushed higher against other major currencies Thursday on increasingly bullish sentiment about the greenback following the Federal Reserve's historic decision to lift US interest rates. 

PHOTO: AFP

DEC 18, 20157:28 AM

[NEW YORK] The US dollar pushed higher against other major currencies Thursday on increasingly bullish sentiment about the greenback following the Federal Reserve's historic decision to lift US interest rates.

Kathy Lien, managing director of BK Asset Management, said the debate about dollar "parity" with the euro was back on the front burner after the Fed's policy-setting Federal Open Market Committee (FOMC) on Wednesday enacted the first US interest rate hike in nearly a decade.

Ms Lien said a lackluster business index reading from the Philadelphia Federal Reserve "failed to derail the dollar rally."

She cited a spate of worries about Europe, including the prospect of another terrorist attack and "excruciatingly slow growth." "The recent reversal in the euro has many investors wondering whether the euro parity party is back on," she said.

Christopher Vecchio, currency analyst at DailyFX, said the Fed's announcement Wednesday included a rate "glide path" that implies about four rate hikes in 2016.

"Ahead of the FOMC, it was widely anticipated that the Fed would reduce its expected glide path to have it fall closer in line with market expectation," Mr Vecchio said. "But the Fed's path of defiance instead is proving to be a veritable source of support for the US dollar."

AFP