Dollar gains as Fed stays on track for gradual rate hikes
NEW YORK (AFP) – The dollar gained Wednesday after the Federal Reserve signaled it was on track to gradually lift interest rates, raising expectations it will again act in June.
The wording of the Fed s policy statement strengthens the prospect of two more increases in the benchmark lending rate this year, boosting the dollar against the euro and other major currencies.
Global equity markets were mixed. The Dow finished slightly higher, while the S&P 500 and Nasdaq both fell modestly. Frankfurt rose modestly, while London and Paris dipped.
The Fed gave a generally upbeat outlook on the US economy, saying that some weak data in the first quarter were “likely to be transitory” and predicting that economic activity would expand “at a moderate pace.”
Several analysts said the statement clears the way for the US central bank to lift rates next month, although that partly depends on US data. A key release comes Friday with issuing of the US jobs report for April.
“Given the tone of the statement, we believe the bar for inaction in June is high,” a note from Barclays said. “The committee seems eager to look through any weakness and has, at long last, reached a consensus, in our view, that a gradual pace of rate hikes this year is warranted.”
The euro was down against the dollar ahead of Sunday s second round of France s presidential election, in which moderate Emmanuel Macron is expected to beat his far-right, anti-EU opponent Marine Le Pen. The two candidates traded insults in a heated TV debate on Wednesday ahead of this weekend s runoff.
Crude prices remained under pressure after the US government reported a much smaller fall in oil stocks than analysts had expected.
In earnings news, Apple shed 0.3 percent after reporting a 4.9 percent rise in second-quarter profit to $11 billion. But iPhone sales came in slightly lower than in the year-ago period.
Media shares fell sharply following results from Time Warner that were generally strong, but included disappointing advertising revenue at its Turner broadcasting division. Analysts worry that the growth of streaming services is hitting broadcasting profits.
Disney lost 2.4 percent, Twenty-First Century Fox, 5.1 percent and Viacom, 7.3 percent. All three will report earnings in the coming days.
French oil giant Total meanwhile lost the top market capitalization spot in the Paris CAC 40 index on Wednesday, making way for the luxury behemoth LVMH.