Fed statement boosts US dollar

[NEW YORK] The dollar rallied on Wednesday, buoyed by the Federal Reserve's policy statement suggesting an interest rate hike could come in December.

After a two-day meeting, the policy-setting Federal Open Market Committee kept its benchmark federal funds rate unchanged near zero, as expected, and downplayed concerns about international developments that it had cited in September as reason to delay a hike.

It presented a rosier view of the economy than it had last month, highlighting "solid" increases in consumer spending - the key driver of the economy - and business investment.

The dollar jumped more than one cent against the euro, which dropped below US$1.10 for the first time since early August. Around 2100 GMT, the euro traded at US$1.0921, down from US$1.1041 at the same time Tuesday.

The greenback advanced to 121.09 yen from 120.48 yen the prior day.

Amid expectations before the meeting that the Fed could delay the rate move until at least March, the FOMC clearly put a hike on the table "at its next meeting", which is December 15-16.

"With the Fed still on track to raise interest rates before long, we maintain our outlook for a stronger US dollar," said Nick Bennenbroek, head of currency strategy at Wells Fargo Securities.

AFP