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USD Pares Losses as Oil Prices Slide

Published August 17, 2017
  • The U.S. Dollar declined over 1.25% yesterday afternoon as the market digested the minutes of the Federal Reserve FOMC’s latest policy meeting
  • The minutes of the 2-day meeting, which wrapped up on July 26, 2017, were generally viewed as dovish, and emphasized the wide-ranging debates FED Policymakers had on topics such stock prices, financial stability, and the inflation outlook
  • While Policymakers agreed that a decline in long-term inflation expectations would be undesirable, they disagreed on whether current expectations on longer-term inflation are well-founded
  • These comments have increased concerns that the FED could delay future rate hikes until concerns over the recent softness in inflation are assuaged
  • Also weighing on USD yesterday was the announcement that Trump dissolved 2 Economic Advisory councils
  • The councils were disbanded after a flurry of resignations by high profile CEOs, which was prompted by Trump’s response to the events in Virginia this past weekend
  • The Canadian (Petro) Dollar is feeling the impact of today’s dip in Oil prices. WTI Crude is down 0.50% this session after yesterday’s U.S. Energy Information Administration (EIA) report showing the largest weekly increase in U.S. production since June. U.S. crude output (largely shale) rose by 79,000 bpd last week to 9.5MM bpd
  • The increase in production offset the price impact of yesterday’s American Petroleum Institute report showing U.S. crude stockpiles falling by 9MM barrels
  • NAFTA negotiations continue today through Sunday, largely focusing on consolidating demands from the 3 countries. Trump has threatened to scrap the agreement unless there are major changes. Canadian Foreign Minister Chrystia Freeland’s opening statement included a dig at the U.S. obsession with cutting trade deficits, saying “Canada does not view trade surpluses or deficits as a primary measure of whether a trading relationship works.”