Dollar off on Trump chaos and Fed minutes

Yesterday, the US Dollar was on the defensive against its major peers as markets were digesting the minutes of the Fed’s July meeting and CEOs backlash against President Donald Trump renewed concerns about his ability to deliver on his agenda.

The readout of the July 25-26 meeting showed that some members called for halting interest rate hikes until it was clear the inflation trend was transitory, but it also indicated that the Fed was poised to begin reducing its $4.2 trillion portfolio of Bonds.

The Loonie rose to a fresh high as North American Free Trade Agreement talks started on Wednesday, with dissent among Republicans over Trump’s Virginia comments putting policy agenda at risk. The US is drawing a hard line with demands for concessions aimed at slashing trade deficits with Mexico and Canada and boosting US content for autos. US-Canada-Mexico trade has quadrupled since NAFTA took effect in 1994, surpassing $1 trillion in 2015. NAFTA includes Canada, Mexico and the US and is being renegotiated at the behest of US President Trump who made a campaign promise to get a better deal for US workers.

Meanwhile, the Euro jumped against the US Dollar in early Asian sessions, recovering from the previous day’s low of $1.1681, its lowest level in nearly three weeks. The common currency had dropped after Reuters reported sources saying that European Central Bank President Mario Draghi will not deliver a new policy message at his planned August 25 speech in the US Federal Reserve’s Jackson Hole conference.

Minutes from the ECB’s July meeting released yesterday could cast light on the timing of the tapering of asset purchases. The report is also likely to reveal central bankers’ judgment on the Euro’s rise.