US Dollar Trades Mixed Ahead of Fed Policy Minutes
The US dollar was mixed against its major trading partners early Wednesday, up against the Canadian dollar and yen, and down against the European currencies – ahead of a very busy data schedule that precedes Thursday’s Thanksgiving holiday and Friday’s early market close.
The U.S. dollar index, which measures the currency against a basket of six counterparts, was broadly flat at 107.1, after shedding 0.65% the previous day amid a pick-up in sentiment that supported riskier currencies.
Durables goods new orders data for October and weekly initial jobless claims are scheduled to be released Wednesday followed by the S&P Global flash estimates.
Further, new home sales data for October and the final Michigan Sentiment reading for November are scheduled for release at 10:00 am ET, followed by weekly EIA petroleum stocks at 10:30 am ET and weekly natural gas stocks at 12:00 noon.
Earlier Wednesday, the Mortgage Bankers Association said that lower mortgage rates lifted mortgage applications in the week ended Nov. 18, with gains in both refinancing activity and new purchases.
The minutes of the Nov. 1-2 Federal Open Market Committee meeting is scheduled to be released today and then markets will look ahead to an appearance by Federal Reserve Chair Jerome Powell on Nov. 30.
A quick summary of foreign exchange activity heading into Wednesday shows that EUR-USD rose to 1.032 from 1.0303 at the Tuesday US close and 1.027 at the same time Tuesday morning. READ: Dollar Trades Stronger as Market Focus on FOMC Meeting
The EU flash manufacturing PMI improved in November while the services PMI was unchanged, though both remained below the breakeven point and still indicate contraction, data released earlier Wednesday showed.
The European Central Bank meets next on Dec. 15. ECB Vice President Luis de Guindos said overnight that he expects negative Eurozone GDP in Q4 and high inflation. GBP-USD rose to 1.1937 from 1.1884 at the Tuesday US close and 1.1876 at the same time Tuesday morning.
Data released overnight showed that the UK flash manufacturing and services PMIs both held steady in November, keeping the readings below the breakeven point, and signalling further contraction. The Bank of England meets next on Dec. 15. BOE members Huw Pill and Catherine Mann both speak later Wednesday.
USD-JPY rose to 141.4927 from 141.2168 at the Tuesday US close and 141.2317 at the same time Tuesday morning. Wednesday is a holiday in Japan and there are no data on the schedule. The Bank of Japan is still expected to hold its monetary policy stance steady at its next meeting on Dec. 19-20.
USD-CAD rose to 1.3416 from 1.3372 at the Tuesday US close and 1.3392 at the same time Tuesday morning. Canadian corporate profits data are scheduled to be released at 8:30 am ET. The next Bank of Canada meeting is set for Dec. 7.
“At the moment FX traders are likely to be torn between the continued hawkish comments by Fed members and the prospect of what the Fed will do in 2023,” currency analysts at Commerzbank said in a note.
Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers are both scheduled to speak at 4:30 pm ET.