March 21, 2018 / 8:30 PM / 6 months ago

FOREX-Dollar stumbles as Fed stands pat on three rate hikes for 2018

    * Dollar falls as Fed sticks to three rate-hike view for
2018
    * Mexican peso, Canadian dollar surge on NAFTA news
    * Australian dollar hits 3-month lows on trade war worries
    * Sterling gains on strongest wage data in over 2 years

 (Updates market action, adds quotes)
    By Richard Leong
    NEW YORK, March 21 (Reuters) - The dollar recorded its
largest one-day loss in two months against a basket of
currencies on Wednesday as Federal Reserve officials stuck to
their view of three rate increases for 2018 as they want to see
a further pickup in inflation.
    The U.S. central bank as expected delivered a quarter point
rate hike to lift its target range on key borrowing costs to
1.50-1.75 percent. However, it disappointed currency traders who
had bet it was prepared to raise rates perhaps four times this
year as the jobs market approaches full employment.
    “It looks like a bit of a letdown even though the Fed’s
overall outlook is hawkish because their economic outlook has
strengthened. That’s why we are seeing a bit of a disappointment
on the dollar side," said Minh Trang, senior foreign currency
trader at Silicon Valley Bank in Santa Clara, California.
    Jerome Powell, in his first news conference as Fed chief,
said he has not seen evidence of an acceleration in wage growth
amid tightening labor conditions.
    Interest rates futures implied traders priced in the next
rate hike at the Fed's June 12-13 policy meeting, followed by
another rate increase in December, CME Group's FedWatch program
showed.
    The dollar index, which tracks the greenback versus a
basket of six currencies, fell 0.693 points or 0.77 percent, to
89.678. It booked its steepest one-day drop since Jan. 24 when
it fell 1 percent.
    The greenback ended down 0.54 percent at 105.95 yen. 
    The euro rose 0.82 percent for its biggest one-day
gain in nearly two months at $1.2340. 
    The Canadian dollar and Mexican peso initially rose on
reports the White House had dropped a demand related to auto
exports in the renegotiation of the North American Free Trade
Agreement (NAFTA).
    The Canadian dollar rose 1.32 percent at C$1.2900
per U.S. dollar. The peso increased 1.89 percent at
18.4110 pesos per U.S. dollar after touching a 6-1/2 week high
at 18.4150 pesos.
    The Australian dollar rallied 1.15 percent at
$0.7765, rebounding from a three-month low of $0.7672 in early
trade.
    Australia, a big producer of commodities, is among the most
vulnerable countries if U.S. President Donald Trump's
protectionist policy spurs a reprisal from commodity consumer
China.
    Sterling finished up 1.01 percent at $1.4140 after
data showed UK wages grew at their fastest pace in more than two
years, supporting bets that the Bank of England would raise
interest rates as early as May. 
========================================================
    Currency bid prices at 3:54PM (1954 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.2338        $1.2240     +0.80%         +2.85%      +1.2348     +1.2242
 Dollar/Yen       JPY=        105.9000       106.5300    -0.59%         -6.01%      +106.6300   +105.8900
 Euro/Yen         EURJPY=     130.68         130.41      +0.21%         -3.33%      +131.0500   +130.2100
 Dollar/Swiss     CHF=        0.9490         0.9563      -0.76%         -2.60%      +0.9566     +0.9486
 Sterling/Dollar  GBP=        1.4145         1.3997      +1.06%         +4.68%      +1.4150     +1.3997
 Dollar/Canadian  CAD=        1.2895         1.3071      -1.35%         +2.53%      +1.3078     +1.2890
 Australian/Doll  AUD=        0.7770         0.7682      +1.15%         -0.40%      +0.7779     +0.7673
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1711         1.1707      +0.03%         +0.19%      +1.1729     +1.1690
 Euro/Sterling    EURGBP=     0.8721         0.8745      -0.27%         -1.82%      +0.8758     +0.8708
 NZ Dollar/Dolar  NZD=        0.7235         0.7182      +0.74%         +2.10%      +0.7245     +0.7154
 Dollar/Norway    NOK=        7.6952         7.7470      -0.67%         -6.24%      +7.7558     +7.6930
 Euro/Norway      EURNOK=     9.4953         9.4836      +0.12%         -3.59%      +9.5110     +9.4782
 Dollar/Sweden    SEK=        8.1849         8.2202      +0.37%         -0.20%      +8.2374     +8.1841
 Euro/Sweden      EURSEK=     10.1020        10.0648     +0.37%         +2.67%      +10.1152    +10.0580
    

    
 (Additional reporting by Tommy Wilkes
Editing by David Gregorio and Phil Berlowitz)
  
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