Dollar falls as Fed hikes last; markets are waiting for the ECB

 LONDON (Reuters) - The dollar extended losses on Thursday, a day after the Federal Reserve made what some expect will be its last rate hike, while market attention shifted across the Atlantic to the European Central Bank's impending rate announcement.

The Fed raised interest rates by a quarter of a percentage point on Wednesday, as expected, the 11th rate hike in the last 12 meetings.

While Fed Chairman Jerome Powell left the door open to more hikes in September, traders appeared unconvinced and the dollar extended Wednesday's modest post-session slide of 0.3%.

"The market thinks it's likely that the rate hike streak we've had is now over," said Jane Foley, head of FX strategy at Rabobank.

The dollar index, which measures the currency against six major peers, was last down 0.5% at 100.60.

"(The) United States is closer to the end of the tourism cycle than its peers. A dovish pivot from the Fed is likely to put downward pressure on the US dollar in the medium term," said Emin Hajiyev, chief economist at Insight Investment.

Next up is the focus on the ECB, with investors expecting the central bank to similarly raise rates by 25 basis points (bps) at the conclusion of its monetary policy meeting on Thursday, focusing on the outlook and expectations for September.

Before the decision, the euro gained 0.5% to $1.1144.

"The market was primed for the ECB to hike in September," Rabobank's Foley said.

"If the likelihood of a September move diminishes even slightly compared to what the market expected, the euro could be a little less robust."

The Japanese yen was 0.1% higher at 140.17 against the dollar.

The Bank of Japan (BOJ) will announce its monetary policy decision on Friday and it is largely seen to maintain a very loose stance, although the possibility of a change in its yield curve control policy remains.

Against a weaker US dollar, the risk-sensitive Australian and New Zealand dollars strengthened as the prospect that the global monetary tightening cycle could end soon boosted sentiment.

The New Zealand dollar was 0.6% higher at $0.6252, after earlier jumping more than 1% to a weekly high of $0.6274.

The Aussie similarly jumped almost 1% to a weekly high of $0.6821.

Sterling hit a weekly high of $1.2995 earlier in the session and was last 0.2% higher, while the greenback fell to an 8-1/2-year low against the Swiss franc at 0.8554.

China's yuan strengthened in the offshore market, hitting a peak of 7.1170 per dollar, its strongest level since mid-June. It was last up 0.1% at 7.1449 per dollar.

China's industrial profits extended this year's double-digit pace of decline into a sixth month, data showed on Thursday, bolstering the case for more policy support to help the economy.

The US dollar has seen a significant drop following the latest announcement from the Federal Reserve suggesting that it may have completed its rate hike cycle. As markets react to these developments, investors are eagerly awaiting the European Central Bank's (ECB) upcoming decision on further insight into global monetary policy. In this article, we delve into the reasons for the dollar's plunge and the significance of the upcoming ECB announcement.

Fed signals on latest hike:

The Federal Reserve's latest policy statement signaled a shift in its approach to interest rates, suggesting that the recent hike could be its last for the foreseeable future. The Fed's decision came amid concerns about inflationary pressures and economic growth, sparking speculation among investors and market participants.

The downward spiral of the dollar:

The US dollar faced a significant sell-off as the market absorbed news of a possible end to the Fed's tightening cycle. Investors responded to uncertainty surrounding future monetary policy and sought alternative currencies and assets for safety and potential returns.

Impact on global markets:

The dollar's decline was reflected in global financial markets, with various asset classes experiencing volatility. Stocks, commodities and emerging market currencies reacted to the news, while safe-haven assets such as gold and government bonds saw increased demand.

Possible implications for trade and investment:

A weaker dollar can have significant implications for international trade and investment. Export-oriented economies may benefit from a more competitive exchange rate, while imports from the US could become relatively more expensive, leading to shifts in trade dynamics.

Market focus turns to ECB:

With a Fed rate hike potentially out of the way, investors' attention is now shifting to the European Central Bank's upcoming decision. The ECB's announcement regarding its own monetary policy may provide a major insight into the direction of the eurozone economy and currency and further influence global markets.

The double challenge of the ECB:

The ECB faces a dual challenge: managing inflationary pressures and supporting economic recovery in the Eurozone. The decisions of politicians could affect the value of the euro and determine the growth trajectory of the region in the coming months.

Investment Strategies Amidst Uncertainty:

Given the evolving global economic environment, investors are likely to adopt cautious strategies in positioning their portfolios. Diversification, hedging and close monitoring of central bank communications are expected to be key components of their investment decisions.

A sharp decline in the US dollar after the Federal Reserve signaled a possible end to the interest rate hike cycle set the stage for further market volatility and uncertainty. Investors are now eagerly awaiting a decision from the European Central Bank, which could provide a major insight into the outlook for global monetary policy. As the financial world closely monitors the actions of central banks, it remains crucial for market participants to stay informed and prepared for potential changes in the economic environment.

In a significant turn of events, the US dollar fell as the Federal Reserve signaled its latest interest rate hike. Meanwhile, global markets are eagerly awaiting the European Central Bank's (ECB) next move. The evolving economic environment has investors on edge, trying to navigate the potential impact on financial markets. Read on to learn more about this major development and its implications.

In recent financial news, the US Dollar witnessed a sharp decline following a surprise announcement by the Federal Reserve, signaling that this could be their last rate hike. Meanwhile, all eyes are now on the European Central Bank (ECB) as markets await its next move. This current state of uncertainty is creating ripples in global financial markets and forcing investors to keep a close eye on the situation. Here's a comprehensive look at the factors contributing to the dollar's fall and expectations surrounding the ECB's upcoming decisions.

The Federal Reserve's latest hike:

After a series of successive interest rate hikes, the Federal Reserve stunned markets by suggesting its latest move could be its last. This unexpected revelation sent shockwaves through the financial industry and significantly affected the value of the US dollar. Investors are grappling with the implications of this potential policy change, carefully analyzing how it could affect inflation, borrowing costs and overall economic growth.

Market reaction to Fed announcement:

As news of a possible final rate hike emerged, the US dollar saw a quick and steep drop in value against major currencies. Market volatility rose as investors sought to adjust their positions and seek safer havens in times of uncertainty. This sudden weakening of the dollar has implications for international trade, corporate profits and global financial stability.

The ECB decision is big:

As the Fed's announcement rattled the markets, all eyes are now on the European Central Bank. The ECB's upcoming monetary policy decision is eagerly awaited and there is speculation as to whether they will follow the path of the Fed or chart an independent course. Depending on their stance, further fluctuations in exchange rates and asset prices can be expected.

Market sentiment and investor caution:

Given the unpredictability of the current economic environment, market sentiment has become cautious and somewhat risk averse. Investors closely monitor central bank statements and economic indicators to gauge the future trajectory of global financial markets. This cautious approach has led to increased demand for safe assets and the potential for changing investment strategies.

Geopolitical and economic factors:

In addition to the decisions of the central bank, other geopolitical and economic factors also affect market dynamics. Trade tensions, political developments and global supply chain disruptions are among the factors contributing to market volatility. These interconnected variables add additional layers of complexity to the overall economic outlook.

The recent decline in the dollar, triggered by the Federal Reserve's signal of a possible final rate hike, has set the stage for a tense and uncertain market environment. With the decision of the European Central Bank on the horizon, investors are watching the situation closely. In times of increased volatility, it is paramount to be informed and make prudent investment decisions. As the global financial environment evolves, market participants must manage these challenges with vigilance and adaptability.

The global financial environment witnessed significant turbulence as the dollar plunged in response to the Federal Reserve's impending interest rate hike, widely speculated to be its final move in the current cycle. Meanwhile, investors around the world are holding their breath waiting for a major monetary policy decision from the European Central Bank (ECB). This article explores the reasons behind the dollar's slide and sheds light on expectations surrounding the ECB's upcoming move.

Expected Final Federal Reserve Increase:

As the Federal Reserve prepares for its next monetary policy meeting, market pundits and analysts are anticipating a pivotal moment in the world of finance. With inflationary pressures rising, the central bank is trying to counter rising consumer prices while recognizing the need for economic stabilization. The prospect of this being the last rate hike in the current cycle has set off a wave of uncertainty in currency markets and caused the dollar to weaken against major currencies.

The decline of the dollar and the market consequences:

The decline of the dollar has far-reaching implications for global trade, asset markets and economies around the world. As the world's reserve currency, any significant movement in the dollar can be reflected in international markets. Export-oriented economies may see their competitiveness increase, while import-heavy countries may face rising costs, which may impact their growth trajectories. Investors and businesses alike are watching these developments closely to adjust their strategies accordingly.

Decisions of the European Central Bank in the spotlight:

At the same time, market participants are eagerly awaiting the decision of the European Central Bank amid the decline of the dollar. The ECB's policy decisions can significantly affect the strength of the euro and broader market sentiment. Speculation about potential interest rate adjustments or asset purchase programs is rife, making this a key moment for investors seeking insight into the trajectory of the European economy.

Market Volatility and Hedging Strategy:

With uncertainties surrounding the latest Federal Reserve hike and the ECB's decision, market volatility is likely to persist in the near term. Investors are advised to implement sound hedging strategies and diversify their portfolios to mitigate potential risks. In addition, having up-to-date information on market trends and central bank communications will be critical to making informed decisions in this dynamic environment.

With the dollar on a downward spiral ahead of the Federal Reserve's expected final rate hike, the financial world remains on edge as it awaits the European Central Bank's upcoming policy decision. The trajectory of the global economy depends on these central bank moves, and investors must closely monitor market developments to manage potential challenges and seize opportunities. Staying informed and agile will be the key to success in this uncertain time.