NY Open: US dollar firms on FOMC, Italy and Brexit

New York traders like the greenback. They bought it against the major G-10 currency spectrum right from the open, however, the US dollar is retreating from its recent peak on the approach to the 14:00 GMT option expiry time. Traders may be losing a bit of their enthusiasm for dollars on concern that demand on expectations of hawkish sounding Federal Open Market Committee minutes may be misplaced. Fed Chair Powell gave a thorough explanation of why the phrase “the stance of monetary policy remains accommodative” was dropped, so today’s minutes shouldn’t offer up any surprises.

The FOMC minutes are only one concern. The EU is widely expected to reject Italy’s budget proposal, perhaps deciding that annoying one member is better than irritating the other 27 members if the budget was approved. EURUSD is in an intraday downtrend below 1.1590, looking for a break of 1.1520 to extend losses to 1.1430.

GBPUSD traders added weaker than expected inflation data to their rising fears that the UK will leave the European Union without a deal. GBPUSD dropped from 1.3141 at the open to 1.3101 but has since recouped all the losses. 

USDCAD rallied in concert with broad US dollar strength, and it got an added lift from weaker than expected August Manufacturing Shipments data. (Actual -0.4 vs forecast -0.1)

Wall Street is in negative territory as of 14:15 GMT, which could be a few factors including, soft US Building Permits and Housing reports, profit-taking after yesterday’s strong rally and position adjustments ahead of the FOMC minutes. Traders ignored President Trump’s rant yesterday when he said: “my biggest threat is the Fed.”