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Currency Market Analysis

Jan 10, 2019 | Currency Market Analysis

Global Themes

USD tumbles as Fed turns cautious

The US dollar fell overnight after the US Federal Reserve minutes signalled the central bank was considering a pause in its long-running rate hike cycle.

The Fed’s minutes from its December meeting showed that the decision to raise rates was a close call with some Fed members arguing to keep rates steady.

Additionally, the minutes signalled the Fed can now “afford to be patient about further policy firming”.

The news saw the USD weaken.

Greenback driver

The euro benefited from the US dollar’s weakness with the EURUSD trading to the highest level in three months.

The New Zealand dollar also gained.

The Canadian dollar gained after a more upbeat report from the Bank of Canada that suggested another Canadian rate hike could be seen in 2019.

ECB, Fed talk ahead

In other busy session in FX markets, the focus turns to China, with December inflation numbers due at 9.30am.

Later, the European Central Bank minutes are due, while Fed chair Jerome Powell speaks at 1.00am tonight.

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