Dollar tumbles after Trump disbanded his advisory councils and dovish Fed minutes: Aug 17, 2017

Market Review - 16/08/2017  21:48GMT  

Dollar tumbles after Trump disbanded his advisory councils and dovish Fed minutes

Although the greenback extended this week's gain against majority of its peers on easing of tensions between U.S. and North Korea eased, news of the disbanding of President Trump's 2 advisory councils in early afternoon in New York sent dollar falling broadly and the greenback later hit session lows after release of dovish Fed minutes release of dovish Fed minutes dampened market expectation of a rate hike at next meeting in September.  
  
Dollar began its intra-day decline in early New York afternoon when President Trump announced he was dismantling the manufacturing council after the chief executives of 3M and Campbell Soup Co announced they would quit, soon afterward, another strategic and advisory group was also disbanded. Dollar's intra-day fall continued after release of dovish Fed minutes.  
  
The minutes from the FOMC's July meeting showed Fed policymakers had grown increasingly worried about weak U.S. inflation readings, suggesting that the Fed may hold off on raising interest rates.  
  
Fed policymakers spoke at length at the meeting about a recent streak of soft inflation readings, according to the minutes. Inflation has remained below the central bank's 2 percent target for more than five years.   
  
Versus the Japanese yen, although dollar extended this week's rally and climbed to a fresh 1-week high of 110.95, profit taking capped intra-day gain and price moved sideways in New York morning. Price began its intra-day descent after Trump announced he was dismantling 2 of his advisory councils. Dollar later tumbled to session lows of 110.04 after dovish Fed minutes.  
  
The single currency swung wildly in hectic Wednesday's trading. Although price traded sideways in Asia and briefly edged up to intra-day high at 1.1758 in early European morning before retreating swiftly to 1.1691 in European morning on news that ECB's Draghi won't focus on the central bank's monetary policy stance at his appearance at Jackson Hole next week. Euro met renewed selling at 1.1740 and dropped to session low at 1.1681 in New York morning. Later, price rallied on short covering on news of disbanding of Trump's advisory councils and later hit session highs of 1.1778 after dovish Fed minutes.  
  
ECB spokesman said 'ECB's Draghi will not deliver fresh policy message at Jackson Hole; wants to hold off debate until Autumn; Draghi speech will focus on conference theme of fostering a dynamic global economy.'  
  
Although the British pound remained under pressure in Asia and dropped to 1.2843 in European morning, price erased its losses and briefly jumped to intra-day high at 1.2903 in Europe on the release of upbeat UK jobs report. However, cable met renewed selling there and retreated to 1.2850 in New York morning. Price later weakened to a fresh 5-week low of 1.2842 near New York midday before rebounding in tandem with euro and later climbed back to 1.2894 after release of dovish Fed minutes.  
  
The Office for National Statistics said that the rate of unemployment fell to 4.4% in June, from the prior 4.5%. Analysts had expected no change.  
  
The claimant count decreased by a seasonally adjusted 4,200 in July, beating expectations for a gain of 3,700 people and following a rise of 3.500 a month earlier, whose figure was revised from a previously reported increase of 5,900. Meanwhile, the average earnings index, including bonuses, rose by a seasonally adjusted 2.1% in the three months to June, beating forecasts for a 1.8% rise and compared to the previous month's gain of 1.9% (revised from an initial 1.8%).  
  
In other news, U.S. President Donald Trump said 'Kim Jong Un of North Korea made a very wise and well reasoned decision. The alternative would have been both catastrophic and unacceptable.'  
  
Data to be released on Thursday:  
  
New Zealand PPI, Japan exports, imports, trade balance, Australia unemployment rate, employment change, France ILO unemployment rate, Germany wholesale price index, UK retail sales, EU CPI, core CPI, trade balance, ECB monetary policy meeting account, Canada manufacturing sales, and U.S. initial jobless claims, Philadelphia Fed survery, capacity utilization, industrial output, manufacturing output, leading indicators.