FOREX-Dollar jumps after strong economy keeps Fed on track for Dec hike

Reuters

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    * Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

 (Recasts with Fed announcement, adds analyst quote, updates
rates)
    By Kate Duguid
    NEW YORK, Nov 8 (Reuters) - The U.S. dollar strengthened
against the euro on Thursday after the Federal Reserve held
rates steady as expected, and said strong jobs and spending kept
the economy on track, setting up for a rate hike in December. 
    The central bank's statement reflected little change in its
outlook for the economy since the last policy meeting in
September, with inflation remaining near its 2 percent target,
unemployment falling and risks to the economic outlook appearing
to be "roughly balanced."  urn:newsml:reuters.com:*:nTLA8MEE46
    The euro  EUR=  was down 0.46 percent on the day against the
greenback, which had risen ahead of the announcement. 
    "The dollar had rallied into the statement, so it’s not
clear how much more juice it will get with the Fed coming in as
expected," said Boris Schlossberg, managing director of foreign
exchange strategy at BK Asset Management in New York. 
    Against the euro, the dollar initially weakened as analysts
said traders fixated on the slightly dovish comment that
business investment had "moderated from its rapid pace earlier
in the year," which could act as a possible drag on future
economic growth. But it soon rebounded as "apart from that they
have not signaled any warning signs at all," said Schlossberg.
    The gains against the yen were less notable, with the dollar
at roughly the equivalent to 113.91 yen, down from the day's
low, but still weaker than the peak hit earlier at 113.46
 JPY= . The dollar has gained over the past week against the yen
due to divergence in the monetary policies of the U.S. Fed and
the Bank of Japan.
    Against a basket of six rival currencies, the dollar index
was up 0.6 percent from late Wednesday  .DXY . The index had
fallen in the wake of the U.S. midterm elections, which split
power between the two houses of Congress. Democrats’ control of
the House of Representatives suggests they will act as a check
on President Donald Trump and could block further tax cuts and
deregulation. 
    The greenback has rallied this year since the president’s
Republican Party pushed through significant tax cuts, and strong
economic growth has prompted the Fed to steadily raise interest
rates. 
    Earlier on Thursday, the euro fell after the European
Commission cut its forecasts for Italian growth, adding to
investor concerns about Italy's debt and economic outlook. 

 (Reporting by Kate Duguid;
Additional reporting by Tommy Wilkes in London; Editing by Lisa
Shumaker)
 ((kate.duguid@thomsonreuters.com; +646-223-6118; Reuters
Messaging: kate.duguid@thomsonreuters.com @thomsonreuters.net))

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