The US dollar lost ground against its main competitors during most of its session on Wednesday, but recovered most of its lost ground after the announcement of the Federal Reserve System.
As expected, the Fed announced its decision to raise interest rates by a quarter of a point on Wednesday.
The Fed also reiterated that further gradual increase in interest rates would be in line with the mandate to promote maximum employment and price stability.
However, observers noticed the inclusion of the word “some” in a statement about a further gradual increase in rates.
Another evidence that the Fed plans to raise rates less than previously thought is provided by central bank forecasts, which indicate two rate increases in 2019 compared with the previous forecast of three increases.
According to a report by the National Association of Realtors (NAR), home sales in the US unexpectedly showed a significant increase in November.
NAR reported that sales of homes on the secondary market rose 1.9 percent to 5.32 million in annual terms, after rising 1.4 percent to 5.22 million in October. Economists had expected sales in the secondary housing market to fall by 0.6 percent.
On Tuesday, the Italian Ministry of the Economy announced the conclusion of an informal agreement with the European Commission on the budget plan.
The deal was reportedly framed on Wednesday at a meeting of EU commissioners in Brussels. A revised budget agreement will allow Italy to avoid EU disciplinary action.
The US dollar fell to a low of 1.1439 against the euro on Wednesday, but has since recovered to the level of 1.1375.
The volume of construction in the euro area fell in October after rising in the previous month, data showed Eurostat. The volume of construction has decreased by 1.6 percent since September, when it grew by 2.1 percent.
Business confidence in Germany fell to its lowest level in two years, Ifo survey data showed. The Ifo business index fell to 101 from 102 in November. Economists had expected the figure to be 101.7.
German producer price inflation remained at its highest level in 19 months in November, according to data from the Federal Statistical Office. Producer prices rose 3.3 percent in annual terms in November, as in October. Economists had expected an increase of 3.1 percent.
The US dollar fell to a low of 1.2679 against the pound sterling on Wednesday, but has since recovered to the level of 1.2625.
In November, consumer price inflation in the UK slowed to its lowest level in the last twenty months, in line with economists ’expectations, helped by falling gasoline prices.
The consumer price index rose 2.3 percent year on year after rising 2.4 percent in October, according to data from the National Statistical Office. The latest inflation rate was the lowest since March 2017, when inflation was at the same level.
The US dollar fell to a low of 112.088 against the Japanese yen on Wednesday, but has since risen to 112.400.
The Ministry of Finance of Japan reported that in November, the trade deficit was 737.3 billion yen. This did not match the projected deficit of 630.0 billion yen after 450.1 billion yen in October.