The dollar was having a hard time on Thursday following the news that the Fed would stick to its plan to increase interest rates three times this year instead of four times as was expected by some analysts.
On Wednesday, the Fed increased rates by 25 basis points to 1.75 percent emphasizing their confidence on tax cuts and government spending that will support the economy. The dollar index, which monitors the greenback against its peers, went down by 0.3 percent closing at 89.520 following its recent drop of 0.7 percent overnight. The greenback also fell by 0.3 percent against its Japanese counterpart closing at 105.715 Yen JPY= following its 0.5 percent decline the day before. The sterling prolonged its overnight rally and hit a six-week high of $1.4163 while the euro kept flat at $1.2365 EUR= after gaining 0.8 percent overnight.
On Thursday, oil prices surged supported by an unexpected decrease in U.S. crude inventories. According to EIA, on late Wednesday, U.S. crude inventories declined by 2.6 million barrels in the week ending on March 16, to 428.31 million barrels. The weak greenback, which makes oil cheaper in international markets, can potentially drive demand. Lastly, the OPEC led production cuts are also boosting oil prices.
U.S. WTI crude futures settled at $65.69 per barrel at 0021 GMT, gaining 0.3 percent or 22 cents. Brent Crude futures settled at $69.65 per barrel, up by 0.3 cents or by 28 cents. Both benchmarks are floating just under their highest levels since early February.