US Dollar Shows Modest Recovery Ahead of Fed Meeting Minutes Release
Published January 3, 2018
The US dollar broke its 5-day losing streak, achieving a modest recovery against other major currencies as the greenback looks towards the upcoming release of the December 2017 meetings from the Federal Reserve at 2:00 PM EST today.
Investors will look for further insight into the Fed’s inflation targets for 2018 and for commentary on the trajectory of additional rate hikes over the next few years; other US data of note today includes construction spending and ISM Manufacturing PMI at 10:00 AM EST.
Analysts are also speculating that the Fed may surprise markets this year if the recently passed US tax overhaul manages to have a major impact on US growth. For now, the recent uptick in commodity prices are compelling other central banks to raise interest rates, thereby lessening the divergence between local rates and Federal Reserve rates.
USD/CAD remains near the low 1.2500s this morning with this mark serving as a strong support level for the pair. The loonie remains bolstered by rate hike expectations which show, at time of writing, a 47 percent chance of a rate hike from the Bank of Canada in January.
Oil prices are also pulling the loonie higher as the commodity continues to march towards multi-year highs related to geopolitical developments and ongoing production cuts from OPEC. The relative instability in Iran is attributing to higher prices, although these protests are not directly affecting the country’s oil production.
Global stocks continue to climb higher in January as the Trump Administration’s tax cuts come into effect. US and European shares posted gains near record highs as bullish sentiment continues.