CURRENCIES: Dollar Struggles Ahead Of Last Fed Decision Of 2018; Commodity Currencies Crash
December 18 2018 - 4:08PM
Dow Jones News
By Anneken Tappe, MarketWatch
Dollar rallies sharply against Norwegian krone
The U.S. dollar was struggling for direction on Tuesday, ahead
of the impending Federal Reserve policy decision and as global
stocks staged a tepid rebound from a multisession skid.
While the dollar benefited from haven flows during times of
market stress before, this week doesn't show the same pattern.
Market participants are also awaiting Wednesday's Federal Reserve
monetary policy decision, at which a 25 basis point interest rate
increase is expected.
Nonetheless, President Donald Trump once more reiterated that he
wouldn't agree with a rate hike in a tweet Tuesday morning.
(https://twitter.com/realDonaldTrump/status/1075001077576151041)
Read:Time for a Fed Pause
(https://www.wsj.com/articles/time-for-a-fed-pause-11545092108)
"Criticism of the Fed is unseemly, unnecessary, and harmful.
This is especially true coming days ahead of the FOMC meeting,
which strikes us as taking on an air of desperation as equity
markets tank," said Win Thin, global head of currency strategy at
Brown Brothers Harriman. "Taking President Trump's lead, White
House trade adviser Peter Navarro blamed the Fed for recent market
volatility. Call us old-fashioned but the head of the National
Trade Council should not be making comments on Fed policy."
The ICE U.S. Dollar Index was last little changed at 97.093.
Don't miss:With a rate hike priced in, dollar traders wait for
Fed's 2019 guidance
(http://www.marketwatch.com/story/with-a-rate-hike-priced-in-dollar-traders-wait-for-feds-2019-guidance-2018-12-17)
The greenback enjoyed bigger gains against commodity currencies,
like the Norwegian krone , against which it jumped to an almost
three-year high, as the oil prices deepened its slide into bear
market, usually defined as a drop of at least 20% from a recent
peak. Crude-oil futures for January delivery finished at their
lowest level since August 2017
(http://www.marketwatch.com/story/us-oil-futures-drop-over-7-for-lowest-finish-since-august-2017-2018-12-18).
The buck last bought 8.7476 krone. The U.S. currency also moved
higher against the Canadian dollar and Russian ruble .
More in favor among G-10 currencies were the euro , British
pound , Japanese yen and New Zealand dollar .
The euro last bought $1.1357, up from $1.1348 and sterling
fetched $1.2639, up 0.1% from late Monday in New York. Versus the
yen, the dollar slipped to Yen112.54, from Yen112.83. The New
Zealand dollar, was the strongest dollar on Tuesday even as it
retraced some of its sharp rally, last fetching$0.6848, up
0.7%.
Late Tuesday, Italy's government reportedly reached an accord
with the European Union
(http://www.marketwatch.com/story/italy-reached-budget-agreement-with-european-union-reports-2018-12-18)
with regards to its budget proposal for 2019. Rome's budget draft
had initially been rejected as it proposed a budget deficit of 2.4%
of gross domestic product, which would have violated EU fiscal
rules.
In Brexit news, Labour Party leader Jeremy Corbyn said Monday
that he would bring a vote of no-confidence in Prime Minister
Theresa May for running down the clock on a Brexit deal. While May
reached an agreement with the European Union in November, she has
postponed the British Parliament's vote on the deal until the week
of Jan 14., which many members of Parliament consider too late.
As this would only be a no-confidence motion into the Prime
Minister, a loss wouldn't trigger a fresh election. The
conservative European Research Group and Northern Ireland's
Democratic Unionist Party, the former of which brought a vote of
no-confidence against May last week, said they would support the
Prime Minister.
(END) Dow Jones Newswires
December 18, 2018 15:53 ET (20:53 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.