The dollar is trading down across the board Thursday morning as the Federal Reserve meeting minutes are largely overshadowed by uncertainty around the future of U.S. talks with China and North Korea. The euro is recovering from the lows off of ECB meeting minutes. The pound advanced after better-than-expected U.K. retail sales.
Geopolitical problems play the pairs
The Federal Reserve meeting minutes released Wednesday signaled a rate hike at the next FOMC meeting in June, giving a boost to the dollar throughout the rest of the day. However, the slightly dovish tone of the minutes set in and looming geopolitical concerns took over Thursday morning.
The EUR/USD pair is trading up around 1.172 after dipping as low as 1.167 last night. The European Central Bank meeting minutes said that financial stability conditions in the Eurozone are still favorable. Concerns over the Italian government are holding back the euro from advancing further.
While the euro has to worry about the new Italian government, the dollar has its own concerns as the likelihood of the U.S. reaching a trade deal with China seems to diminish. There is also concerns that President Trump’s summit with North Korea’s Kim Jong Un won’t happen. Those concerns are helping the safe-haven Japanese yen gain on the dollar. USD/JPY is trading around 109.4.
The pound isn’t without political problems either. Brexit negotiations are keeping investors cautious on the currency.
Sterling rises on retail sales
The GBP/USD pair was reaching its lowest point since December 2017, but better-than-expected retail sales for April helped the pound advance.
Cable bounced above 1.340 Thursday morning and trades just under that mark. The pair fell as low as 1.330 Wednesday.
U.K. retail sales for April increased 1.6% month over month, compared to 0.7% expected. Excluding fuel, retail sales grew 1.3% month over month, compared to 0.4% expected. The year over year measurements also beat expectations.
Earlier this week, inflation data missed expectations, holding down the pound. Later today, we’ll hear Bank of England Governor Mark Carney speak at the BoE Market Forum at Bloomberg. New York Fed President William Dudley is also scheduled to speak. We’ll see how or if their comments influence cable.
Trump considering car and truck tariff
President Trump is looking into tariffs on car and truck imports, relating them to national security concerns.
Trump’s administration is considering an additional duty of 25%. The news drew criticism from Japan, South Korea, Japan and Germany. Chancellor Angela Merkel reiterated Germany’s commitment to free trade.
Higher jobless claims don’t help the dollar
The dollar is trading down against the major pairs and an increase in weekly jobless claims didn’t help the greenback get out of that rut.
Initial jobless claims for the week ending May 18 increased to 234,000, higher than the 220,000 expected and an increase from 223,000 the week prior.
Continuing jobless claims came out lower than expected at 1.741 million.