* Fed sees moderate economic growth next year
* Traders await ECB meetings, trade deadline
* HK dlr hits highest since July as carry trades unwind
* Sterling rises after latest UK election poll
(New throughout, updates prices, market activity and comments
to show reaction to Fed decision)
By Saqib Iqbal Ahmed
NEW YORK, Dec 11 (Reuters) - The U.S. dollar fell on
Wednesday to a four-month low against a basket of currencies
after the Federal Reserve held interest rates steady and Fed
Chair Jerome Powell said a significant, persistent inflation
rise would be needed to hike rates.
The Fed left the benchmark overnight lending rate in its
1.50% to 1.75% target range, and the U.S. central bank's
rate-setting committee said after its two-day policy meeting
that it expects moderate economic growth and low unemployment
through next year's presidential election. "A Fed determined to maintain an accommodative financial
environment seems to finally be playing against the greenback,"
said Juan Perez, senior currency trader with Tempus, Inc. in
Washington.
Rate increases are less needed than in the mid- 1990's
rate-cut cycle, Powell told a news conference.
"The bar to a rate hike remains higher than the bar to
lowering rates further, but overall you are looking at a Fed
that is fairly confident about where the economy is headed and
expects inflation to remain under pressure for a prolonged
period of time," said Karl Schamotta, chief market strategist at
Cambridge Global Payments in Toronto.
The dollar index .DXY , which measures the greenback
against six other major currencies, was 0.33% lower at 97.095,
its lowest since Aug. 9.
"Market participants are going to keep an eye out for the
European Central Bank meeting tomorrow, but mostly will remain
focused on what happens on Saturday with respect to U.S.-China
trade negotiations," Schamotta said.
U.S. President Donald Trump has set Dec. 15 as the date to
impose tariffs on nearly $160 billion in Chinese consumer goods.
Washington is laying the groundwork to delay tariffs, a person
briefed on the situation told Reuters, although there is no
clarity on what the decision will be. "If we do see a delay in tariffs, that clears the way for
other currencies to rise relative to the dollar," Schamotta
said.
The euro was 0.4% higher ahead of new ECB boss Christine
Lagarde's first policy meeting on Thursday. Investors will
scrutinize her every word. Elsewhere, Sweden's crown jumped to a more than four-month
high against the dollar after strong inflation data made it
highly likely the country would end negative interest rates. The
dollar was 1.16% lower against the Swedish crown. In another notable move, the Hong Kong dollar rallied to its
strongest level since July 24, which analysts attributed to the
unwinding of bets previously profiting from "carry trades" -
borrowing with low interest rates in Hong Kong to purchase U.S.
dollar-denominated assets. The greenback was 0.24% lower against the Hong Kong dollar.
HKD= . Hong Kong's currency is pegged to the greenback at a
tight range of 7.75-7.85 per dollar and the city's monetary
policy moves lock-step with the United States.
The pound was 0.37% higher in thin trading on the eve of
Britain's general election, shrugging off a poll that showed the
ruling Conservative Party might fail to win a majority.
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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