Dollar Higher Ahead of Wednesday’s Fed Minutes

The dollar rose against a basket of major currencies on Tuesday as its worst week of losses in a year drove some profit taking and investors turned their attention to Wednesday’s release of the minutes of the U.S. Federal Reserve’s meeting early this month.

The dollar index .DXY, which tracks the greenback against a basket of six major rivals, was up 0.2 percent to 97.178. The index fell to a more than six month low on Monday.

“It’s a little bit of profit taking on some of the currency pairs,” said Alfonso Esparza, senior currency analyst at OANDA in Toronto.

Worries over U.S. President Donald Trump’s recent firing of FBI Director James Comey, who was overseeing a probe into possible links between the president’s team and Russia, and concerns about possible delays in Trump’s efforts to implement his economic stimulus plans have recently pressured the dollar.

On Tuesday, U.S. Treasury Secretary Steven Mnuchin said while he hopes to get tax reform done this year, it will not happen by August.

Traders were also looking to the Fed meeting minutes set to be released at 2 p.m. E.T. (1800 GMT) on Wednesday to get clues to whether the Fed will raise rates at its June meeting, Esparza said.

Interest rate futures implied traders saw about a 83 percent chance of a rate increase at the Fed’s June meeting.

“We haven’t heard from any Fed members clarifying or warning the market that they are on the wrong side. That’s a positive sign that June is still a go and the Fed is likely to hike,” said Esparza.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza