The U.S. dollar climbed to a more-than-two-month high on Wednesday, as European currencies weakened on the back of poor economic data and political worries.
U.S. traders were also digesting comments made by President Donald Trump, who once against criticized Federal Reserve Chairman Jerome Powell and the central bank’s gradual tightening of monetary policy in an interview with The Wall Street Journal. “Every time we do something great, he raises interest rates,” Trump said in the interview. He added that he might be regretting nominating Powell to serve as chairman.
The dollar, measured by the ICE U.S. Dollar Index DXY, +0.47% appeared unfazed by the central bank criticism, and shot 0.5% higher to 96.416, touching its highest level since mid-August, according to FactSet.
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The euro EURUSD, -0.6626% and the British pound GBPUSD, -0.5546% were the worst performers among developed-market currencies early Wednesday, as eurozone purchasing-manager index readings came in weaker-than-expected and U.K. Prime Minister Theresa May remained under fire from her party over her handling of Brexit negotiations.
The euro was down at $1.1404, its lowest since mid-August and down from $1.1471 late Tuesday, while sterling bought $1.2915, versus $1.2982 late Tuesday.
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In Sweden, the Riksbank kept interest rates on hold at -0.5%, in line with expectations, but signaled that it would get going on the tightening cycle soon albeit at a slow pace. Market expectations see a first rate hike in December or February.
The dollar was stronger versus the Swedish krona USDSEK, +0.6969% Wednesday, buying 9.0251 up from 9.0251 krona late Tuesday in New York.
In other central bank news, the Bank of Canada is expected to announce a hike in its benchmark interest rate Wednesday morning at 10 a.m. Eastern.
“Despite the unexpectedly sharp drop in headline consumer price inflation and the setback in August retail sales, the Bank of Canada is still seen hiking rates by 25 basis points to 1.75%, with the solid optimism seen in this week’s BOC quarterly business outlook survey, along with strength in Q3 personal consumption underpinning expectations,” wrote Marc Ostwald, global strategist and chief economist at ADM Investor Services International. Investors will be looking for indication for the pace of future rate hikes.
The Canadian dollar USDCAD, -0.0076% nonetheless started the session slightly weaker against the greenback, with one U.S. dollar fetching $1.3088, up from C$1.3087.
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