Dollar was undermined by dovish rhetoric from the Fed minutes and FOMC members.

The dollar was undermined by dovish rhetoric from the Fed minutes and FOMC members. Domestic politics was also negative with the currency at fresh 2-month lows.

Oil prices moved sharply higher despite disappointing inventory data with WTI posting 3-week highs before a correction.

Commodity currencies took advantage of US weakness, although buying was restrained by underlying growth doubts.

The Canadian dollar, however, under-performed as the Bank of Canada reiterated uncertainty over the economic outlook.

After gains on Wednesday, equity markets stalled with no further positive rhetoric on US-China trade developments limiting support.

According to minutes from the December Federal Reserve policy meeting many policymakers stated that the Fed could be patient about further tightening given muted inflation pressures and that relatively limited amount of further tightening would likely be appropriate. Recent developments, including financial market volatility and global growth concerns made the appropriate extent and timing of future tightening less clear than earlier.

There was choppy Sterling trading on Wednesday amid conflicting fundamentals. The government suffered another loss on the Brexit vote as the House of Commons voted that the government would need to present alternative proposals within 3 days if it loses next week’s crucial vote. The defeat triggered further uncertainty over the outlook which unsettled Sterling. There was, however, support from the firmer tone in global risk appetite with strong gains in oil prices also a positive element.

Comments from Bank of England Governor Carney were drowned out by political noise as he repeated that interest rate increases were likely to be gradual and limited. Overall, GBP/USD pushed to test 1.2800, although GBP/EUR was unable to make any gains with the price sinking to the 1.1050 area. UK data was weak with BRC reporting a 0.7% year-on-year decline in December like-for-like retail sales, reinforcing concerns over subdued spending and Sterling edged lower on Thursday.

Economic Calendar

12:30ECB Monetary Policy Meeting Accounts--
13:30USD Goods Trade Balance(NOV, 2018)-75.50B-77.25B
13:30CAD Building Permits (M/M)(NOV, 2018)--0.20%
13:30CAD New Housing Price Index (M/M)(NOV, 2018)-0
13:30USD Continuing Jobless Claims(DEC 15, 2018)1.714K1.740K
13:30USD Initial Jobless Claims(DEC 15, 2018)225K231K
15:00USD Wholesale Inventories(NOV 01, 2018)0.70%0.80%
17:00USD FOMC Member Powell Speech--
17:40FOMC Member J. Bullard Speaks--
18:00Fed President Evans Speaks--
21:45NZD Building Permits (M/M)(NOV, 2018)-1.50%
22:30FOMC Member Richard Harris Clarida Speech--
23:30JPY Household Spending (Y/Y)(NOV, 2018)--0.30%
23:50JPY Current Account Total (Yen)(NOV, 2018)1.384B1.310B

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.