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By xemarketanalysis November 28, 2018 2:01 pm
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    Xe Market Analysis: Dollar Retreats as Powell eyes more gradual rate hikes

    OVERVIEW

    • The US Dollar weakened as investors search Fed Chair Powell's speech for clues on rate hikes, more gradual hikes now expected. 
    • Sterling rose off of two-week lows only to be struck down by Bank of England Brexit forecasts
    • The Canadian Dollar bounced off a 5-month low as the US, Canada and Mexico prepare to sign the USMCA trade agreement.

    HIGHLIGHT

    The US Dollar hit a 5-month high against the Canadian Dollar today as the Loonie touched its weakest level since June 28th. After hitting a high of 1.33549, USD CAD closed at 1.32542. The recent dive in the price of oil has seen the Canadian Dollar weaken dramatically over the last month.

    US DOLLAR

    The US Dollar traded in a tight range as we awaited Federal Reserve Chair Jerome Powell's speech. It seems that more gradual rate hikes are now on the Fed's agenda. The Greenback weakened on the back of his comments at the Economic Club of New York. Powell has seen pressure from the White House to hold back from further rate increases, though he said there is "no preset policy path," and the Fed will pay attention to economic data to make interest rate decisions.

    BRITISH POUND

    The Pound is widely mixed today as Labour Party finance spokesman John McDonnell stated he would accept a second Brexit vote. The Pound has weakened due to the Bank of England's analysis of possible Brexit scenarios showed that GBP could weaken up to 25% if Britain gets a no-deal Brexit. Currently, it seems PM May will need to persuade quite a few backbenchers to get her Brexit deal through on the 12th of December. 

    EURO

    The Euro is relatively unchanged today as the Italian Budget Deficit negotiations fell silent. There is still no movement from either party on their targets with the Italian's eyeing a 2.4% budget deficit to GDP but the EU holding firm at 2%.

    CANADIAN DOLLAR

    The Canadian Dollar reached a five-month low against the US Dollar today. This comes on the back of falling Oil prices and an upcoming trade pact between the US, Canada, and Mexico. The USD to CAD pair has since fallen off these highs after Fed Chair Powell's speech disappointed many investors. Last month, Powell said rates were a "long way" from neutral, yet this month he contradicted that statement. 

    AUSTRALIAN DOLLAR

    The Australian Dollar is up over 1% against the US Dollar as Fed Chair Powell stated that more gradual rate hikes are to be expected. These developments, along with signs of a possible truce in the US and Chinese trade war, boosted both currencies today.

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