Today, Wednesday, the U.S. Dollar is trading in mostly quiet ranges as market participants wait for the release of the FOMC Minutes at 2PM and Bank of Canada meeting announcement at 10AM.
The Canadian Dollar has been on a great run lately, up by 3.0% since January 1st, primarily enjoying a return to improved outlooks on commodities and oil prices, as well as optimism on solutions to trade questions that have dragged on the last few years.
On our side, the Minutes are likely to show some arguments against hiking and if highlighted plenty by the press in our trading session, be sure it will help stocks and perhaps hurt the buck as we close the day. Meanwhile, a government shutdown continues and a survey of business optimism, by the National Federation of Independent business, declined to its lowest in 14 months.
Any Fed focus on a down turning economy or major point to accommodate the financial environment on the notes are what we think will aid in depreciating the greenback. No data Thursday means we will be looking forward to inflationary numbers as CPI on Friday.
What to Watch Today…
- FOMC Minutes 2PM
- Bank of Canada 10AM
The complete economic calendar can be found here.
Contraction in German Industrial Production left many economists ominous about the prospects for Gross Domestic Product growth for the region if its largest economy is struggling. Nevertheless, the Euro seems poised to make a return to gains with mounting struggles in the U.S. and renewed risk-appetite that will likely propel its status as a carry-trade currency; one used plenty to fund the exchange for other high-yielding assets that carry more risk than Euro as well. We see a slow resurgence coming but the elements are starting to build up meriting a dollar downfall against the shared currency.
Pound Sterling is holding steady ahead of a dramatic voted scheduled for Monday that will help determine if the U.K. truly is headed towards a chaotic and unprecedented separation from the European Union that comes with no trading arrangements. Parliament seems resolute to get on to vote and perhaps kill any chance of Theresa May staying as head of state much longer. We think right now the currency will stay in familiar ranges, likely to step up depreciation in February if by then there are no guarantees that a no-deal scenario potential is to be avoided.