The U.S. Dollar is trading in slightly negative ranges across the board, likely just a result of traders reining in some profits from yesterday’s climb.
Anticipation for the FOMC meeting is keeping things relatively quiet in FX, with the exception being our neighboring currencies (CAD & MXN) which rose overnight after good NAFTA news.
Today’s trading may be light because of inclement weather on the Eastern seaboard, but there is plenty to look forward to at 2PM since it will be the Fed’s first decision meeting under new head Jerome Powell. Some experts are saying the Fed will be looking to hike a total of four times in 2018 and that guidance will signal that today. We feel increasing borrowing costs is possible, but see the Fed looking to stick to just three.
The Peso had a strong resurgence after news of improved dialogue in NAFTA revamp talks. A positive development came about as the Trump administration negotiators decided to drop a demand that would disrupt the movement of autos across borders.
The idea of requiring that cars made in Mexico and Canada for consumption in the U.S. must have at least 50.0% local content was dropped. Peso is now trading around its strongest level in a month. However, swings, wild ones for sure, are common for the currency, which ranked as one of the most volatile pairs to the dollar in 2017. The currency is up 5.3% thus far this year.
Sterling had a bit of recovery overnight after stellar wage figures. British wage growth grew at a pace of 2.6%, the fastest since 2016. Average Weekly Earnings were also revised upward from the month prior.
Ahead of the bank of England meeting on Thursday, it seems like the Pound is getting good news as data strikes a healthy tune while Chancellor Angela Merkel is now calling for the U.K. be given a “deep,” comprehensive trade deal. Swings for GBP will remain as they have all year with a simple headline likely to cause downturns.