Dollar index goes up 0.2% after Fed says ending bond purchases by March

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Dollar index goes up 0.2% after Fed says ending bond purchases by March

The U.S. dollar index went up 0.2% Trading range narrows from mid-week swings Euro and sterling down 0.3% Yen appreciates New throughout, updates prices, comments, and previous LONDON by David Henry and Iain Withers NEW YORK LONDON, December 17, Reuters - The dollar went up on Friday as markets approached the end of a busy week in which major central banks laid out plans to unwind the Pandemic-era stimulus. A Federal Reserve official said in a television interview that the Fed will gain the ability to raise interest rates in 2022 by ending bond purchases by March, which will give the dollar a boost in morning trading in New York. Central banks are moving at different rates to adjust their monetary policies, highlighting deep uncertainties about how the fast-spreading Omicron coronaviruses variant will hit the global economy and how persistently high inflation will be. The dollar index rose 0.2% to 96.1970 on the day. The euro and sterling fell about 0.3% after gains the two previous days, and stood at $1.1299 and $1.3284, respectively, at 1454 GMT. After two days of central bank meetings and commentary on monetary policy and economies, a Fed official, John Williams, president of the Federal Reserve Bank of New York, appeared on CNBC in one of few scheduled events on Friday. There will be little informational value in price action in the coming days with the meetings out of the way, according to strategists at TD Securities. They added that the USD can consolidate into the year-end as FX markets work off residual positioning value excesses. The dollar index is still up 7% since May, despite the fact that it was down 0.7% from a November high. The Bank of England is the first G7 economy to raise rates since the Pandemic and the European Central Bank announced the end of its pandemic emergency asset-buying scheme next March, despite the fact that it promises copious support for as long as needed via its long-running Asset Purchase Program. Their moves came after the Fed moved to end its bond buying earlier than planned, paving the way for three one-quarter percentage point interest rate increases next year. Chris Weston, head of research at Pepperstone, wrote in a report that the Fed pencilled in three hikes for 2022, and sounding optimistic about economic prosperity even though Omicron said that the Fed has allowed other central banks the ability to take a more hawkish turn. The Bank of Japan has been optimistic that it will remain among the most dovish central banks after reducing emergency pandemic funding but maintained ultra-loose policy on Friday. The price of digital currency fell by 4% to $45,904.