U.S. dollar jumps on Fed jolt as Trump speech looms

U.S. dollar jumps on Fed jolt as Trump speech looms

Several of Yellen's US central bank colleagues in recent days had also put a rise at the next rate-setting meeting on March 14-15 of the committee firmly in view.

The Fed raised interest rates for only the second time in adecade at its policy meeting last December, but has forecastthree rate increases this year on the back of the lowunemployment rate - now 4.8 percent - and risinginflation.

The probability attached to a March rate hike rose to 52 per cent on Wednesday, up from 34 per cent a week earlier.

Fed Chair Janet Yellen and Vice Chairman Stanley Fischer will speak on Friday, likely providing further signals on the US central bank's policy path.

The Euro to US Dollar exchange rate is more likely to be influenced by the strength of the Euro on Thursday as leftover sentiment from Tuesday night's Fed and Trump news will have cooled.

"The main theme doing the rounds this week was the increasing hawkishness of Fed members, which clearly pointed to a rate hike in March", said TreasuryOne currency dealer Andre Botha.

"The previous two occasions ahead of a Fed hike, we've seen gold weaken only to rally in the aftermath and that could potentially be seen once again", said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

When the Fed published its economic forecasts for the next three years in December it suggested that the Federal Funds rate may rise to 1.4% in 2017, 2.1% in 2018, and 2.9% in 2019.

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On Thursday, Powell was asked whether the Fed might be inclined to accelerate the pace of increases to perhaps four this year.

As she did in January, Yellen insisted that the Fed was not behind the curve in raising rates, despite having increased them only twice since the Great Recession ended nearly eight years ago.

On Friday, Fed Chair Janet Yellen flung the door wide open to a March rate increase after acknowledging that the economy was progressing toward the central bank's dual mandate of economic growth and price stability.

And indeed the view among Fed policymakers appears to be that further policy tightening is appropriate regardless of any potential fiscal boost, as inflation edges higher and the economy nears the Fed's goal of full employment. Brent crude, the Global benchmark, was up one-quarter of 1 per cent at $55.22 a barrel, while West Texas Intermediate gained 0.3 per cent to $52.75.

The S&P 500 index showed two new 52-week highs and no new lows, while the Nasdaq recorded 24 new highs and 12 new lows.

And New York Fed Chief William Dudley said the case for a rate increase has become "a lot more compelling".

Hyman also said that Friday next week's employment report, five days before the Fed announcement, would be important, adding that he expects average hourly earnings to climb 0.4 percent in last month's report, up from 0.1 percent in January, adding to the case for a rate hike. That's just below the Fed's official target of 2%.

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