The dollar rose to a more than one-week high against a basket of other major currencies on Thursday, boosted by the Federal Reserve's outlook for more rate hikes beyond this year as well as a weakening of the euro on worries about the Italian budget. The greenback reached a two-week peak against the Swiss franc and the Canadian dollar, which fell overnight after US President Donald Trump criticized Canada over the slow pace of talks on the North American Free Trade Agreement.
On Wednesday, the Fed raised rates for the third time in 2018, as expected. The central bank still foresees another rate hike in December, three more next year, and one increase in 2020. That helped propel the dollar on Wednesday and carried over to Thursday, even as the Fed dropped "accommodative" from the its statement, which some analysts said was a dovish signal since it meant the Fed was moving to a neutral stance.
Fed Chairman Jerome Powell later said its monetary policy was still accommodative. "The Fed is moving faster than most central banks and that's dollar-supportive," said Erik Nelson, currency strategist, at Wells Fargo Securities in New York. In late morning trading, the dollar index rose 0.5 percent to 94.66.
The greenback's gains came at the expense of the euro, which declined on media reports that an Italian budget meeting was likely to be delayed. That spooked traders concerned that Italy's ruling parties will push for a bigger deficit target. The euro dropped 0.4 percent to $1.1690, after falling to $1.1671, its weakest since September 20.