The dollar remained under pressure last night, after minutes from the Federal Reserve’s December meeting showed that Fed members were uncertain about what effect the incoming Trump administration would have on the U.S. economy.
Having reached peaks not seen since 2002, the Greenback saw profit taking and selling pressure as Fed officials grappled with “considerable uncertainty” about how policies proposed by President-elect Donald Trump would affect U.S. growth.
Officials also emphasized possible risks to the economy from a strong dollar dampening recent currency gains.
The Fed raised short-term interest-rates in December for the first time in a year and signaled a more aggressive path of tightening in 2017.
Data this week also could bolster the Fed’s case for raising rates.
Manufacturing data released Tuesday showed continued recovery in the U.S. factory sector. That comes ahead of Friday’s U.S. jobs report, seen as the clearest read on the health of the labor market.
The dollar fell from ¥118.18 to ¥117.06 late Wednesday in New York. The euro was up from $1.0400 to $1.0492. AUD rose from 0.7240 to 0.7284, a three week high. NZD rose from 0.6910 to 0.6957, still inside its multi-week range while AUD/NZD ranged sideways between 1.0440 and 1.0480.
Oil prices ticked higher as the dollar fell and analysts said they expect that U.S. stockpiles declined last week. A Wall Street Journal survey of 10 analysts suggested that crude stockpiles likely fell 2 million barrels in the week ended Friday. The analysts did, however, forecast gasoline stockpiles to grow by 1.3 million barrels and stockpiles of distillates, which include heating oil and diesel, to grow by 600,000 barrels.
Light, sweet crude for February delivery settled up 1.8% or 93 cents at $53.26 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, gained 1.8% or 99 cents to $56.46 a barrel on ICE Futures Europe.
Early gains in oil also came after bullish Chinese economic data and positive signs regarding production cuts from the Organization of the Petroleum Exporting Countries.
Gold prices also pushed higher thanks to a weaker greenback. Gold for February delivery was up 0.3% at $1,165.10 a troy ounce in electronic trading on the Comex division of the New York Mercantile Exchange.
Looking to the new year, analysts point to the strength of the dollar and the pace of rate increases as the two major drivers for the gold price.
The Stoxx Europe 600 slipped 0.12% after entering a bull market Tuesday, having climbed 20% from a previous low closing at 365.26. The U.K.’s benchmark FTSE 100 index edged up 0.17% to its fifth consecutive record close at 7189.74, the first streak of that length since February 1998.
The Nikkei Stock Average rose 2.51% to 19594.16, after a four-day holiday weekend following a positive signal on Japanese manufacturing. The Shanghai Composite Index rose 0.73% to 3158.79.
