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U.S. Dollar Higher After Fed Hints At December Rate Hike

The U.S. dollar drifted higher against its major counterparts in the Asian session on Friday, after the Federal Reserve left rates unchanged, while signaling its next rate hike in December and three more hikes next year.

Following a two-day meeting ending on Thursday, the Fed decided to maintain the target range for the federal funds rate at 2 to 2.25 percent, citing realized and expected labor market conditions and inflation.

The central bank reiterated that it expects further gradual increase in interest rates will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near its 2 percent objective over the medium term.

The Fed's statement was largely unchanged, noting the labor market has continued to strengthen and economic activity has been rising at a strong rate since the previous month.

Fed's rate hike plans as well as worries about a slowdown in China dragged down Asian shares.

CME Group's FedWatch tool currently indicates more than a 70 percent chance for a quarter point rate increase in December.

The greenback appreciated to a 3-day high of 1.3041 against the pound, after falling to 1.3070 at 5:45 pm ET. The greenback is likely to find resistance around the 1.28 level.

The greenback spiked up to an 8-day high of 1.1341 against the euro and held steady thereafter. The greenback is poised to find resistance around the 1.12 level.

The greenback that closed Thursday's trading at 1.0060 against the franc strengthened to an 8-day high of 1.0079. On the upside, 1.02 is possibly seen as the next resistance level for the greenback.

The greenback firmed to 2-day highs of 0.7237 against the aussie and 0.6731 against the kiwi, off its early lows of 0.7270 and 0.6765, respectively. The next possible resistance for the greenback is seen around 0.71 against the aussie and 0.65 against the kiwi.

The greenback reversed from an early low of 1.3140 against the loonie, rising to 1.3182. Next key resistance for the greenback is seen around the 1.33 region.

The greenback held steady against the yen, after having eased to 113.83 from a high of 114.08 set at the beginning of today's trading. At Thursday's close, the pair was worth 114.06.

Data from the Bank of Japan showed that Japan M2 money stock rose 2.7 percent on year in October, coming in at 1,007.5 trillion yen.

That was shy of expectations for an increase of 2.8 percent, which would have been unchanged from the September reading.

Looking ahead, U.K. GDP data for the third quarter, trade data, industrial production and construction output for September are set for release in the European session.

In the New York session, U.S. producer prices for October, wholesale inventories for September and University of Michigan's preliminary consumer sentiment index for November are scheduled for release.

Federal Reserve Governor Randal Quarles gives speech about financial regulation at the Brookings Institution in Washington DC at 9:05 am ET.

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