Dollar Remains on Defensive Before Fed Minutes 

USD

After falling over the past two days, the U.S. dollar remains on the defensive this morning. The U.S. dollar saw its recent peak on Friday as a poor non-farm payrolls report showed stellar wage growth. Geopolitical events abroad had been driving trade over the past two weeks, putting U.S. data at the back of the line.

Today’s docket should put the greenback back in the spotlight. At 2 pm, the Federal Reserve will release the minutes of its last meeting. Odds of a December rate hike have risen consistently over the past month and currently sit at 77%. If the minutes show an increasingly hawkish Fed, those odds will rise and will take the greenback with it. However, more discussion about chronically low inflation could see bets of a December hike fall and weaken the currency.

We will also be keeping an eye on President Trump’s proposed tax plan. He said that we will see adjustments to the plan in the coming weeks. While any reform would face an uphill battle on Capitol Hill, tax reform would have positive ramifications for the greenback.

 

EUR

The Euro is holding on to recent gains and is currently trading at a one-week high against the U.S. dollar. The Euro’s rebound from earlier in the month is being attributed the Catalonian’s president reluctance to declare independence. Indeed, the regional government appeared to stop short of declaring independence from Spain in order to negotiate with the Spanish government. Markets took this as the Catalonians “blinking” in their standoff with the rest of Spain. As such, Spanish stocks and bonds rallied and the Euro has found support. The situation is still volatile but the Euro is experiencing short-term relief.

 

SEK

On a slow news day, the Swedish krona makes the headlines. The krona jumped to its strongest level in over two weeks after inflation expectations rose. Riksbank Deputy Governor Kerstin af Jochnick said price growth is going in the right direction. He continued to say that stable ground is needed before increasing interest rates.