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Dollar Recovering After Fed Announcement


The dollar has been losing ground against its major rivals for most of Wednesday's session, but has recovered much of its lost ground following today's announcement from the Federal Reserve.

As expected, the Fed announced its decision to raise interest rates by a quarter point on Wednesday.

The Fed also reiterated that further gradual increases in interest rates would be consistent with the FOMC's mandate to foster maximum employment and price stability.

However, eagle-eyed Fed watchers will notice the inclusion of the word "some" in the statement regarding further gradual rate increases.

In another indication the Fed plans to raise rates less than previously anticipated, the central bank's projections point to two rate hikes in 2019 compared to the previous forecast for three.

Existing home sales in the U.S. unexpectedly showed a significant increase in the month of November, according to a report released by the National Association of Realtors on Wednesday.

NAR said existing home sales surged up by 1.9 percent to an annual rate of 5.32 million in November after jumping by 1.4 percent to a rate of 5.22 million in October. Economists had expected existing home sales to drop by 0.6 percent.

Italy's Economy Ministry announced Tuesday that an informal agreement had been made with the European Commission over its budget plan.

The deal was reportedly formalized on Wednesday at a meeting of EU commissioners in Brussels. The revised budget agreement will allow Italy to escape disciplinary measures by the EU.

The dollar dropped to a low of $1.1439 against the Euro Wednesday, but has since bounced back to around $1.1375.

Eurozone construction output dropped in October after rising in the previous month, figures from Eurostat showed on Wednesday. Construction output fell 1.6 percent from September, when it grew 2.1 percent.

Germany's business confidence slid to its lowest level in over two years, reports said Tuesday, citing data from the Ifo survey. The Ifo Business Climate Index dropped to 101 from 102 in November. Economists had expected a score of 101.7.

Germany's producer price inflation remained at its highest level in 19 months in November, data from the Federal Statistical Office showed on Wednesday. Producer prices rose 3.3 percent year-on-year in November, same as in October. Economists had expected a 3.1 percent increase.

The buck slid to a low of $1.2679 against the pound sterling Wednesday, but has since rebounded to around $1.2625.

UK consumer price inflation slowed in November to its lowest level in twenty months, in line with economists' expectations, helped by falling petrol prices.

The consumer price index rose 2.3 percent year-on-year following a 2.4 percent increase in October, data from the Office for National Statistics showed on Wednesday. The latest inflation rate was the lowest since March 2017, when inflation was at the same level.

The greenback fell to a low of Y112.088 against the Japanese Yen Wednesday, but has since risen to around Y112.400.

Japan posted a merchandise trade deficit of 737.3 billion yen in November, the Ministry of Finance said on Wednesday. That missed forecasts for a deficit of 630.0 billion yen following the 450.1 billion yen shortfall in October.

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