US Dollar Swings Sideways, Down Against Major Currencies
The United States (US) dollar was mixed heading into Wednesday against European currencies, flat against the yen and down versus the Canadian dollar as markets await the minutes of the Federal Open Market Committee’s June 15-16 meeting.
While the meeting and accompanying forecasts showed the committee had turned slightly more hawkish, analysts expect the minutes to reveal little other than perhaps an increase in the number of participants wanting to discuss the timing for asset purchase tapering to begin.
Otherwise, the US data schedule is light. The Investor Business Daily’s July consumer sentiment measure and the Bureau of Labor Statistics’ May JOLTS report, both to be released are the highlights.
A quick summary of foreign exchange action heading into Wednesday shows that EUR-USD has remained near a three-month low as the dollar has been supported by demand from investors seeking safety, even as Treasury yields have slipped.
The US economy continues to expand, but various headwinds like those seen in last Friday’s employment report are now more apparent.
USD-JPY dropped, posting a 15-day low at 110.38, but later moved back up to levels around 110.70, more than recovering the intraday decline.
The price action was driven by the yen, which showed significant movement. While major economies expand, concerns about the spread of COVID-19 variants are providing significant uncertainty.
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GBP-USD softened into Wednesday, as the UK recovery remains on track despite a spike in COVID cases last week.
UK Prime Minister Boris Johnson said that the economy is still scheduled to reopen fully on July 19, which should further support economic growth. There are also signs of increasing price pressures, which the Bank of England has suggested are temporary.
USD-CAD has drifted lower after rising on Tuesday on strong demand for the US dollar and lower oil prices that dented the Canadian dollar. Talks to increase oil supply at the latest OPEC meeting last week broke down without a conclusion, leaving supply short of demand.
However, market participants see the possibility of renewed talks or of one member state acting on its own to increase supply.
US Dollar Swings Sideways, Down against Major Currencies
