Greenback positive factors traction, BOJ subsequent as much as the plate

© Reuters. An employee of a money changer holds a stack of U.S. Dollar notes before giving it to a customer in Jakarta

By Ian Chua

SYDNEY (Reuters) – The U.S. dollar stood at its highest in two weeks against a basket of currencies early on Friday, having made a decisive move a day after the Federal Reserve delivered a long-awaited hike in interest rates.

Commodity currencies were hardest hit as the firmer greenback took a toll on a range of commodities from oil to base metals and gold. The Canadian dollar was now close to a 12-year low, having come within a whisker of C$ 1.40 per USD .

Argentina’s peso plunged more than 26.5 percent on Thursday as a new government floated the currency as part of a slew of free-market reforms.

The () was flirting with 99.000, holding onto a 1.2 percent gain on Thursday – its biggest rise in over a month. The greenback rose broadly on Wednesday after the Fed ended months of speculation by lifting its benchmark rate off zero.

“The USD can make new cyclical highs in the near term as US interest rate expectations adjust higher,” said Elias Haddad, senior currency strategist at Commonwealth Bank.

The Fed’s own projections were for 100 basis points of hikes in 2016. By contrast, the futures market was only discounting just over 50 basis points of tightening.

“We believe the FOMC’s normalisation process will be gradual and expect 75 bps of rate hikes in 2016 bringing the upper‑bound of the Fed Funds target range to 1.25 percent. This will support the USD.”

Against the yen, the dollar reached its highest in over a week at 122.88 JPY=> before stepping back to 122.51. The euro was back at $ 1.0834 EUR=>, off this week’s peak of $ 1.1060.

Along with their Canadian peer, the Antipodean currencies fared badly. The Australian dollar briefly dipped below 71 U.S. cents for the first time in a month, before edging back to $ 0.7123. Its New Zealand counterpart fell to its lowest in over a week at $ 0.6688 NZD=D4>.

With the Fed out of the way, the focus on Friday will be on the Bank of Japan (BOJ), though the central bank is expected to hold off on any additional stimulus in its final policy review of the year.

But BOJ policymakers are still likely to debate lingering risks to the economic outlook that could warrant additional easing in coming months.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Greenback positive factors traction, BOJ subsequent as much as the plate