The Fed made a move Thursday (February 18) to boost the emergency loan rate that it charges banks from .50 per cent to .75 per cent. While the Central Bank says the hike in its “discount” rate is not going to affect consumers, it is widely believed that this is just the first in several moves to return lending rates to normal as the economy improves.

Definitely a sign that the Fed appears comfortable that the worst of the economic downturn is over, the rate hike decision sparked a boost in dollar buying. Oil prices fell to around $78 in New York trade Thursday, while the dollar surged against most of its major global currency counterparts.

The dollar sits just below 92 yen after spending significant time below the 90 yen level in recent weeks. The greenback has pushed even harder against its major European counterparts.

One Euro is currently worthy $1.3476 as it sits on an important support level last seen in mid-May of 2009. The British Pound is worth just $1.5415 as it looks headed toward key support in the $1.45 area, with $1.37 the next target.

With today’s unexpected hike in the emergency loan rate likely to be followed up with rate increases in the Fed funds rate and other lending funds, it is hard to imagine the dollar losing steam anytime soon.

The dollar index, a measure of the US currencies overall performance against global currencies, saw a nine month high after the news was reported. It looks very likely the Fed is going to raise its base rates at its next meeting following a strong gross domestic product report and more signs that the worst of the economic downturn is over.

Jobs are still scarce, though many analysts appear to believe that it is only a matter of time before jobs open up given the other positive data in the marketplace.

The current spot gold price is $1,104.90 as the precious commodity also dipped after the rate hike news. A strong dollar is generally a negative factor for gold speculation.