The US dollar or it is also known as the DXY index moved up and down in a narrow range between 103.45-104.15. It is especially after the announcement of the results of the FOMC meeting early this morning. 

At the beginning of the Asian session (15/December), Dixie's upward efforts were still constrained in the 103.80s. In fact, the FOMC is more hawkish right now. 

That was done by raising the Fed's current interest rate as well as its projected further hike. The FOMC raised the Fed's interest rate by 50 basis points to a range of 4.25%-4.50%.

It was in line with previous market expectations. In addition, the FOMC confirmed the need for an additional rate hike to a rate of 5.1 percent in 2023 - up from 4.6 percent in projections released in September. 

Powell Still Has the Hawkish Attitude 

In the same projection, the unemployment rate will rise and economic growth will almost stall. Market participants had worried that the latest weaker US inflation data would make the central bank officials take a more dovish stance. 

However, Fed Chairman Jerome Powell instead reinforced his hawkish stance in a press conference following the FOMC announcement. Powell said it's too early to talk about the topic of rate cuts. 

He reiterated that the Fed's current focus is on setting policies that can return the inflation rate to its 2 percent target. This is a series of communications that are more hawkish than the market expects. 

Policymakers are reiterating hopes for an easing of financial conditions. This can be done by maintaining the previous language that an ongoing hike will be needed to apply policy on a fairly restrictive basis.

Wall Street Stock Turned Red

By raising the terminal rate projection to 5.1% and avoiding a sharp fall in the long-term projections, they are refusing to back away from the interest rate higher for longer' message that has been delivered for months.

That was said by Karl Schamotta. Overall, it is a signal that people will need more conclusive evidence in easing inflationary pressures before the Fed actually changes policy direction.

The forex market reacted limitedly to this series of breaking news, while the Wall Street stock exchange immediately turned red. Some analysts think the market's initial reaction is more inclined to worse growth forecasts than projected higher interest rates. 

At least two FOMC meeting participants lowered their 2023 United States growth projections by 0.5 percent. Powell and the FOMC have raised interest rates as expected by as much as 50 basis points.

AUD/USD Declined by 0.4%

However, what the market is capturing is a drop in the GDP forecast for 2023 and higher inflation by the end of 2023. This was said by Chris Beauchamp in an event sometimes ago. 

He is a chief market analyst at IG. The United States dollar ended Wednesday's trading with a decline, although it started squirming again in early Thursday's trading. 

AUD/USD declined by 0.4% to 0.6838. In the other side, GBP/USD fell nearly 0.3% to 1.2390s, while EUR/USD slipped by 0.23% to 1.0658 at the time this news was writing. 

The USD/JPY is relatively flat in the 135.50s, indicating a lack of reaction from the bond market. Before, DXY strengthened in Asian trading on Monday (12/December).

Last Month Inflation Increased by 7.4%

The trigger of above situation is the higher-than-expected US Producer Inflation data. At the time of this news, DXY was moving in the 105.16 range, up 0.22 percent on a daily basis.

According to data published by the United States Bureau of Statistics, Producer Inflation last month increased by 7.4 percent on an annualized basis. 

This figure did shrink from the previous period which reached 8.1 percent. However, it was successfully outperformed the market projection that predicted a decline to 7.2 percent