US Dollar May Rise Before FOMC Minutes After Trump Amplifies Drop
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TALKING POINTS – US DOLLAR, TRUMP, FOMC, YEN, STOCKS, BREXIT, BRITISH POUND
- US Dollar retreat amplified by comments from President Trump
- Pre-positioning for FOMC minutes might inspire USD recovery
- British Pound at risk as EU’s Barnier, UK’s Raab discuss Brexit
The US Dollar weakened in Asia Pacific trade following another verbal intervention from President Trump. He bemoaned the Fed’s interest rate hikes and said he will criticize the central bank if it continues to tighten. This follows reports that expressed disappointment with Jerome Powell at a meeting with donors Friday, saying he’d hoped for a “cheap-money Fed chairman”.
The Japanese Yen also declined as most regional stocks rose, sapping the appeal of the perennially anti-risk currency. The catch-all MSCI Asia Pacific benchmark index added 0.3 percent. Newswires attributed the move to hopes for de-escalation in the trade war between the US and China following reports emerging last week suggesting that the two countries are back at the negotiating table.
Looking ahead, another quiet day on the European economic data front might put markets at the mercy of stray headline flow. Soundbites from a meeting between UK Brexit Secretary Dominic Raab and top EU negotiator Michel Barnier might take top billing. The two sides have struggled to make progress toward a trade deal. Signs of continued deadlock might hurt the British Pound.
The greenback might also find a lifeline amid pre-positioning for the release of minutes from Augusts’ FOMC meeting, due Wednesday. That sit-down resulted in a decidedly hawkish turn in official rhetoric. Speculation about seeing more of the same in the Minutes document might trigger preemptive unwinding of short-term bets against the greenback.
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ASIA PACIFIC TRADING SESSION
EUROPEAN TRADING SESSION
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.