US Dollar Index Reaches 4-Month Low; Oil Prices Begin 2018 Strong
Published January 2, 2018
The start of 2018 marks a very good opportunity for USD buyers, as the US dollar is down across all majors. The US Dollar Index slid as low as 91.75 today, which is near its weakest point since September 20th. The global economy gained momentum in 2017, fueling expectations for tighter monetary policy in other countries which would lessen the divergence between the Federal Reserve and other central banks.
EUR hit a three-month high versus the greenback today, reaching 1.2080 after a record high reading on euro zone manufacturing activity for December boosted the single currency.
Oil prices steadied today after posting a second annual increase amid signs that a glut in global inventories is easing. Prices posted their strongest opening to a year since 2014 with WTI Crude trading at ~$60.60 a barrel and Brent Crude trading at ~$66.86 a barrel.
It will be a relatively low-impact day today as far as the economic calendar goes (Canada and US Manufacturing data) but that will change tomorrow as market watchers look ahead to the release of December Fed meeting minutes.
January marks a critical period for the loonie with employment data on Friday, Bank of Canada Monetary Policy Report on Jan 17th, and the next round of NAFTA negotiations set to begin in Montreal on Jan 23rd. Currently, the market is pricing in 40-45% odds of a rate hike this month.