After the increase in the federal funds rate last week the greenback gained versus all major currencies except the NZD. The increase in the benchmark interest rate first since 2006 shows the confidence the central bank on the US economy continues to improve. To projected growth, unemployment and inflation in 2016 is slightly lower than projected in September, but Yellen remains confident that the inflation rate will grow and reach the target of 2.0%.
FOMC members agreed unanimously to raise the benchmark interest rate from the previous 0 - 0:25%, which has been running since August 2009 to 0:25% - 0:50%, and it also marks the beginning of an era of tightening the monetary policy of the Fed. As shown in 'dot plot' which was released to coincide with economic projections, each of which will have 4 rise in 2016 and 2017. From the projections of the Fed, the benchmark interest rate in 2016 will be in the range of 0.9% - 1.4% and in 2017 between 1.9% - 3.0%, lower than the projection in September were 1.1% - 2.1% for 2016 and 2.1% - 3.4% for 2017. However, according to the decision to increase gradually Yellen will also depend on the economic fundamental data.
Of history a few years ago, usually USD will experience a correction due to profit taking after rising interest rates, but at the end of the year is usually the USD strengthened. For this week's important data from the US is the quarter final GDP to 3, Durable Goods Orders, housing data, and the UoM index Jobless Claims. Another important data is the GDP of the United Kingdom and Canada, Japan CPI and Retail Sales Canada.
FOMC members agreed unanimously to raise the benchmark interest rate from the previous 0 - 0:25%, which has been running since August 2009 to 0:25% - 0:50%, and it also marks the beginning of an era of tightening the monetary policy of the Fed. As shown in 'dot plot' which was released to coincide with economic projections, each of which will have 4 rise in 2016 and 2017. From the projections of the Fed, the benchmark interest rate in 2016 will be in the range of 0.9% - 1.4% and in 2017 between 1.9% - 3.0%, lower than the projection in September were 1.1% - 2.1% for 2016 and 2.1% - 3.4% for 2017. However, according to the decision to increase gradually Yellen will also depend on the economic fundamental data.
Of history a few years ago, usually USD will experience a correction due to profit taking after rising interest rates, but at the end of the year is usually the USD strengthened. For this week's important data from the US is the quarter final GDP to 3, Durable Goods Orders, housing data, and the UoM index Jobless Claims. Another important data is the GDP of the United Kingdom and Canada, Japan CPI and Retail Sales Canada.
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