US dollar rallies upon Fed announcement

The U.S. dollar rose against other major currencies on Wednesday as the Federal Reserve dropped its pledge to keep interest rates near zero for a "considerable time" from its rate guidance, raising market speculation that the central bank is moving closer to interest rates hike.

After its two-day policy meeting, the Fed released a statement on Wednesday saying "it can be patient in beginning to normalize the stance of monetary policy."

Fed Chair Janet Yellen said at a following press conference that it is unlikely the Fed would raise rates for at least next couples of policy meetings, adding "the timing of the initial rise in the fed funds target as well as the path for the target thereafter are contingent on economic conditions."

Analysts said the change in guidance means the central bank is moving another step closer to exiting from the current loose monetary policy. While the labor market is rebounding faster than expected, the Fed is now keeping an eye on the country's economic inflation, which has long been under the target of 2 percent.

U.S. Labor Department reported on Wednesday that the consumer prices declined in November upon sharply lower gasoline prices. Consumer Price Index (CPI), a main gauge of inflation, fell 0.3 percent last month on a seasonally adjusted basis, compared to unchanged index in October. The core CPI, which excludes the volatile food and energy categories, increased 0.1 percent in November.

The dollar index, which measures the greenback against six major currencies, was up 0.92 percent at 88.938 in late trading.

In late New York trading, the euro declined to 1.2324 dollars from 1.2486 dollars in the previous session, and the British pound went down to 1.5560 U.S. dollars from 1.5726 dollars. The Australian dollar edged down to 0.8119 dollar from 0.8211 dollar.

The U.S. dollar bought 118.61 Japanese yen, higher than 117.21 yen of the previous session. The U.S. dollar went up to 0.9744 Swiss francs from 0.9619 Swiss francs, and it rose to 1.1653 Canadian dollars from 1.1636 Canadian dollars.