Dollar Trades Stronger Ahead of FOMC Minutes
The United States (U.S) dollar turned upward against its major trading partners early Wednesday ahead of a busy day of data releases and Federal Open Market Committee (FOMC) minutes.
Later in the week, the highlights include an update to Q1 GDP on Thursday, April personal income and spending data and the final reading for the Michigan Sentiment Index for May on Friday.
Newly installed Federal Reserve Vice Chair Lael Brainard is scheduled to speak Wednesday at a commencement ceremony. The minutes of the Federal Open Market Committee’s May 3-4 meeting is scheduled to be released and should detail the discussion regarding future interest rate increases.
Comments from FOMC officials this week have turned slightly dovish in terms of how fast rates should be increased later in the year, but an increase of 50 basis points remains the expected outcome at the June 14-15 meeting.
A quick summary of foreign exchange activity heading into Wednesday shows that GBP-USD fell to 1.2486 from 1.2534 at the Tuesday US close and 1.2521 at the same point Tuesday morning.
There are no UK data scheduled for release on Wednesday. The Bank of England (BOE) is expected to remain on track for another rate increase at its June 16 meeting to fight inflation.
EUR-USD slipped to 1.0664 from 1.0736 at the Tuesday US close and 1.0709 at the same point Tuesday morning. German GDP surged in Q1, data released overnight showed, while there are signs that German consumer sentiment will improve into June but remain pessimistic. READ: Dollar Trades Mixed Ahead of FOMC Meeting
French consumer confidence fell unexpectedly in May, while the number of French jobseekers rose. Earlier in the week, European Central Bank President Christine Lagarde suggested in a blog that the first ECB rate hike could occur in July.
USD-CAD rose to 1.2867 from 1.2822 at the Tuesday US close and 1.2788 at the same point Tuesday morning. There are no Canadian data scheduled for Wednesday. The Bank of Canada meets next on June 1, where a further rate increase is expected.
USD-JPY rose to 126.94 from 126.8565 but was well below the 127.4723 level at the same time Tuesday morning. The Japanese leading index improved less than expected in March according to data released overnight.
Bank of Japan Governor Haruhiko Kuroda noted that inflation remains a key concern for the BOJ. Analysts expect that the Bank of Japan will remain on its ultra-low monetary policy platform for some time. # Dollar Trades Stronger Ahead of FOMC Minutes