Dollar Gives up Early Gain Ahead of Fed’s Minutes
The United States (U.S.) dollar gave back some of its recent gains against its major trading partners early Wednesday ahead of an expected 400,000 rise in ADP’s monthly private payrolls count and the release of the minutes from the Federal Reserve’s December policy meeting.
According to data, the weekly MBA mortgage application index fell by 2.7% when it was released earlier on Wednesday. An update to the IHS Markit services reading for December and the weekly petroleum stocks data are scheduled for later Wednesday.
Highlights for the rest of the week include weekly jobless claims and the ISM non-manufacturing reading on Thursday and the December employment report on Friday.
Markets remain focused on rising COVID-19 cases, with the likelihood of a surge over the next few weeks as an after-effect to holiday gatherings.
A quick summary of foreign exchange action heading into Wednesday shows that GBP-USD rose to 1.3542 from 1.3529 at the Tuesday US close and from 1.3495 a day earlier.
There are economic data releases out of the UK on Wednesday. Markets still expect a rate increase at the Feb. 3 Bank of England meeting, ahead of a possible Federal Reserve increase mid-year, despite the recent omicron wave.
EUR-USD advanced to 1.1319 from 1.1288 at the Tuesday US close and above the 1.1278 level at the same point a day ago despite negative data.
Eurozone services PMI for December released earlier Wednesday was revised slightly lower from the flash estimate and now stands further below November’s level. Individual country PMI’s were also disappointing, particularly in Germany where the index remained below the breakeven point.
USD-JPY fell to 115.7095 from 116.1354 at the Tuesday US close and 116.1736, giving back some of the recent gains. As with the US on Tuesday, Japan reported a sharp decline in vehicle sales in December earlier on Wednesday.
Other data released on Wednesday showed that consumer confidence declined in December due to stricter COVID-19 lockdowns. USD-CAD rose to 1.2724 from 1.271 at the Tuesday US close but was down slightly from 1.2753 a day ago. Canada reports home building and price data on Wednesday.
As with the US, the highlight of this week’s Canadian data schedule is the employment report for December due to being released on Friday. #Dollar Gives up Early Gain ahead of Fed’s Minutes
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