Dollar hovers near 5-month low after Fed hints pause in 2020

The US dollar rose against a basket of currencies on Thursday, but remained near the 5-month low it hit yesterday, after the Federal Reserve signaled that the US interest rates will be held steady in the next year, which comes ahead of key economic data releases on US producer prices for November.

The dollar index rose by 0.1% to 97.21 points, after it opened at 97.08, and hit an intraday low of 97.04.

The US dollar fell by 0.5% yesterday, in its third straight daily loss, and hit a 5-month low of 97.04, to reflect its continued drop after the Federal Reserve meeting.

The US Federal Reserve decided yesterday in a widely expected move to hold interest rates unchanged between 1.75% and 1.50%, and hinted a pause in 2020.

The US central bank stated that the monetary policy will not change indefinitely, amid forecasts for continued moderate economic growth until the presidential elections scheduled for November 2020.

Federal Reserve Chairman, Jerome Powell, said the US economic outlook was positive, which is why the Fed decided to hold interest rates, and stated that necessary measures will be taken when necessary.

The Fed forecast a moderate US economic growth during 2020, a contraction during 2021, and 13 out of 17 members of the FOMC expect no change in interest rates until 2021.

Investors are anticipating later today key economic data releases on US producer prices for November, as in case of upbeat data dollar will extend its recovery attempts.

At 13:30 GMT, the US economy will release its PPI reading for November, with forecasts for a rise by 0.2% vs 0.4% in October, and the core reading (excluding food and energy prices) is expected to rise by 0.2% vs. 0.3%.