Fundamental Comment

Dollar retains gains after Fed statement, next Fed head eyed


The dollar retained its earlier gains on Wednesday as the Federal Reserve’s statement left the door open for a third interest rate hike next month.

The six-currency gauge, the dollar index, traded higher at 94.80, near its highest level in 15 months recorded last week.

The Fed left interest rates, as predicted, while maintained positive language on the U.S. economy and stressed that the hurricanes would only have an impact over the near term.

"Labor market has continued to strengthen and that economic activity has been rising at a solid rate despite hurricane-related disruptions,” Fed statement said.

"Hurricane-related disruptions and rebuilding will continue to affect economic activity in the near term, but past experience suggests that the storms are unlikely to materially alter the course of the national economy over the medium term," according to the statement.

The statement did not include anything new and its impact on the market was muted, as investors remain alert to the name of the next Fed Chair.

U.S. President is widely expected to name the new Fed head tomorrow afternoon, with expectations referring that Fed Governor Jerome Powell would be the new leader.

However, naming Powell as a Fed head could negatively affect the dollar due to his dovish stance on monetary policy.

December rate hike odds soared to 87.5 percent from 85 percent after the release of the Fed statement, especially after the latest spat of upbeat economic data.

While U.S. employers cut 33,000 jobs in September, they probably added more than 300,000 jobs in October, the non-farm payrolls due on Friday may show.

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