The US dollar mostly held onto gains made after the Federal Reserve was not as dovish as some had expected and the aussie was one of the best performing major currencies after strong jobs data. The kiwi slid after soft GDP data.

The Fed announced on Wednesday it raised interest rates for the second time this year, taking the target range for the Fed funds rate to between 1.00-1.25%, as was widely expected. The US central bank cited continued US economic growth and job market strength, and announced it would begin cutting its holdings of bonds and other securities this year. Fed Chair Janet Yellen indicated the Fed was still looking through soft inflation and blamed recent low inflation numbers on one-off effects.

The greenback rose post-FOMC to 109.85 yen but could not make up for Wednesday’s losses made after weak US CPI and retail sales data when it fell to 108.92 from 110.3 yen. The dollar’s gains will likely be limited as US political uncertainty weighs on the currency after the Washington Post reported that US President Donald Trump was under investigation by Special Counsel Robert Mueller for possible obstruction of justice.

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The aussie surged after strong Australian employment data and jumped up to $0.7630 from $0.7582. Australian jobs beat forecasts in May with the economy adding 42,000 positions versus 10,000 expected. The unemployment rate hit 5.5%, its lowest since 2013. It was expected to remain at 5.7%.

The kiwi fell following weak New Zealand growth data to reach a session low of $0.7207. First quarter GDP missed forecasts and rose 0.5% versus 0.7% forecast, following an increase of 0.4% in the December 2016 quarter.

Sterling was little changed against the dollar after falling yesterday on weak UK average earnings numbers. Focus shifts to the Bank of England policy meeting later today, although rates are expected to remain on hold. Cable traded around $1.2750 during the Asian session.

The euro reversed all of its gains made versus the dollar yesterday, when it came close to the key $1.1300 level, only to fall back down to below $1.1200.

Aside from the forex markets, looking at commodities, US WTI oil prices consolidated losses after dropping below $45 a barrel to a five-week low on Wednesday following a disappointing report on US crude and gasoline stockpiles. Gold slid to its lowest in three weeks at $1257.07 an ounce. The precious metal is usually sensitive to US interest rates, and thus weakened after Wednesday’s Fed rate hike.


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