US Dollar falls ahead of December Fed minutes

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January 9, 2019 12:21pm NYSE:UUP

US Dollar

From Annekan Tappe: The U.S. dollar couldn’t hold its ground versus its rivals on Wednesday, as investors waited for minutes from last month’s Federal Reserve meeting and an anticipated statement on U.S.-China trade relations.

Elsewhere, the Bank of Canada downgraded its predictions for the Canadian economy in light of ailing oil prices, while U.K. Prime Minister Theresa May’s government suffered a blow in a parliamentary vote.

The ICE U.S. Dollar Index DXY, -0.57%  was down 0.5% at 95.392. TheEURUSD, +0.7254%  rose to its best level since October at $1.1518, versus $1.1442 late Tuesday. Similarly, the British pound GBPUSD, +0.3617%  climbed higher to $1.2749 from $1.2716.

As, U.S.-China trade talks appear to have ended on a positive not in Beijing and global stock indexes bounced higher in response. A statement is expected later in the day.

Tuesday night’s address from President Donald Trump contained little new information as the president spoke of a humanitarian crisis at the border but didn’t declare a state of emergency to secure funding for a border wall. With no solution on the horizon, the partial shutdown of the U.S. government over the southern border is set to continue.

Minutes of the Federal Open Market Committee meeting from December, which delivered a rate increase, are due at 2 p.m. Eastern. St. Louis Fed President James Bullard told The Wall Street Journal in an interview Tuesday that while he remained upbeat on the U.S. economy, the country could face a recession if the central bank raised interest rates further. Chicago Fed President Charles Evans, meanwhile, sees as many as three rate increases “eventually“, while Atlanta Fed President Raphael Bostic said he didn’t think the Fed should push rates above the neutral level.

In other central bank news, the Bank of Canada kept its benchmark interest rate steady at 1.75% and downgraded its projections for 2019 gross domestic product growth to 1.7%, in part due to the drop in oil prices. Nevertheless, the Canadian dollar USDCAD, -0.3842%  strengthened, with the greenback last buying C$1.3230, down from C$1.3274 late Tuesday.

Also check out: Turkish lira slides as Erdogan rejects U.S. calls, threatens ‘necessary lesson’ to Kurds

In Brexit matters, the U.K. government suffered two blows in parliamentary votes on Wednesday. First, 303 U.K. lawmakers backed an amendment that restricts the government from making changes to tax laws if its forces the country into a no-deal Brexit. Then, parliament voted in favor of the so-called Grieve amendment, which says that May’s government has three days to come up with an alternative if her Brexit deal gets voted down next Tuesday. Otherwise control of Brexit will go to Parliament.

The Invesco DB US Dollar Index Bullish Fund (UUP) was trading at $25.26 per share on Wednesday afternoon, down $0.17 (-0.67%). Year-to-date, UUP has gained 5.12%, versus a -2.77% rise in the benchmark S&P 500 index during the same period.

UUP currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 17 ETFs in the Currency ETFs category.

This article is brought to you courtesy of MarketWatch.

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