1st LD Writethru: U.S. dollar rises against euro on Fed rate hike

The U.S. dollar gained against the euro on Tuesday as the Federal Reserve decided to raise interest rate, while central banks in Japan and Europe were expected to unleash further stimulus.

U.S. central bank on Dec. 16 announced a rise of its benchmark interest rate by 25 basis points, marking the end to an era of extraordinary easing monetary policy.

Given the considerable improvement in labor market conditions, traders expected that the Fed will continue the rate hike in 2016.

Analysts said the policy divergence between Fed and other central banks have driven investment flows into the U.S. and boosted the greenback.

The dollar index, which measures the greenback against six major peers, was up 0.21 percent at 98.123 in late trading.

In late New York trading, the euro lost to 1.0939 dollars from 1.0976 dollars of the previous session, and the British pound decreased to 1.4829 dollars from 1.4884 dollars. The Australian dollar went up to 0.7302 dollars from 0.7253 dollars.

The dollar bought 120.38 Japanese yen, higher than 120.35 yen of the previous session. The dollar moved up to 0.9913 Swiss francs from 0.9878 Swiss francs, and it moved down to 1.3821 Canadian dollars from 1.3896 Canadian dollars. Endit