The U.S. dollar traded in familiar ranges versus most of its rivals but fell drastically against the sterling late yesterday evening.
The greenback also staged a minor rally against the Canadian dollar as the price of oil dipped lower.
This morning’s economic docket is not doing the greenback any favors as of yet. A report showed that house starts unexpectedly fell in December. However, the number building permits rose more than expected.
Attention will quickly shift to Capitol Hill as Fed Chief Jerome Powell will begin his semi-annual testimony to Congress. The Fed has recently taken a dovish turn and has indicated it might be comfortable with slightly higher inflation, allowing equity markets to regain their momentum. But the Fed Chair is also likely to take tough questions about the recent streak of weaker than expected economic data.
Tensions between the Fed and the White House reached fever pitch at the end of last year but have not subsided. Yesterday, former Fed Chair Janet Yellen said “I doubt that Mr. Trump would even be able to say that the Fed’s goals are maximum employment and price stability.”
What to Watch Today…
- Fed Chair Jerome Powell testifies before Congress
Complete Economic Calendar can be found here.
The Canadian dollar and other oil-based currencies remain under pressure after WTI oil had its steepest decline in nearly a month. President Trump tweeted his displeasure with OPEC’s supply cut and was able to “tweet down” the price of oil. Oil prices have steadied today but remain near their recent lows. There is no major Canadian data scheduled for today although CPI is on tomorrow’s docket.
GBP/USD jumped higher right at the New York close yesterday and continued its rally throughout the night. Early in the day the sterling found support on news that opposition leader Jeremy Corbyn officially backed a second referendum, which seemed like inevitable. The major rally came as news broke that Prime Minister Theresa is likely to try to delay the March 29th Brexit date in an effort to avoid a no-deal Brexit.
May will meet with her cabinet today (9:30 a.m. EST) and reveal the results of the meeting this afternoon (after 12:30 pm EST). Markets took the news as another sign that a no-deal will be untenable by all involved, pushing up the sterling.
As a result, the sterling now sits a four-month high against the U.S. dollar and the strongest level versus the Euro since May 2017.