The U.S. dollar slipped versus many of its rivals for a sixth day in a row on Wednesday, weakened by rhetoric on Federal Reserve policy and also overshadowed by U.S. political developments.
Potential fallout scenarios from Michael Cohen’s plea deal were on investors’ minds on Wednesday, as the former attorney of President Donald Trump implicated the president’s involvement in violating campaign-finance laws. Trump’s former campaign chairman Paul Manafort was found guilty of eight charges including tax fraud on Tuesday.
The ICE U.S. Dollar Index DXY, -0.20% was down 0.3% at 94.992, its lowest level since the beginning of the month.
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More important yet, the Federal Reserve will release the minutes of its most recent monetary policy decision at 2 p.m. Eastern, ahead of Thursday’s start of the central bank’s symposium in Jackson Hole, Wyo. Trump had criticized Fed policy over the weekend, voicing his disappointment with Fed Chairman Jerome Powell raising rates.
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In other central banking news, Dallas Fed President Robert Kaplan said Tuesday that he was looking for three to four interest rates hikes until pressing pause on increasing rates, which exacerbated Tuesday’s slide in the buck. The Fed is expected to hike in September, possibly also in December, which would only leave two additional hikes in 2019, fewer than expected.
Meanwhile, the renegotiation of the North American Free Trade Agreement — which just recently entered its second year after 12 months of more or less gridlock — are back in the headlines. “There seems to be some market confusion on a Nafta ‘handshake’ deal — a bilateral agreement between the U.S. and Mexico,” wrote Dean Popplewell, vice president of market analysis at Oanda. “The U.S. announced that a deal was targeted for Thursday, however, Mexico has denied such an agreement.
Mexican president-elect Andrés Manuel López Obrador is also against including a new chapter on energy investment in Nafta 2.0. The sector was excluded from the initial pact as it was state-operated at the time. In 2013, however, President Enrique Peña Nieto opened it to private and foreign investment.
Mexico’s peso USDMXN, -0.6515% strengthened on Wednesday, also benefitting from the weaker greenback. One dollar last bought 18.8459 pesos, down from 18.9557 pesos late Tuesday.
While news around the third Nafta partner, Canada, have been more quiet, the Canadian dollar USDCAD, -0.1380% was also on top Wednesday, and the U.S. unit bought C$1.3014, down versus C$1.3040.
Elsewhere, the greenback’s biggest rival, the euro EURUSD, +0.3457% , rose to a two-week high at $1.1608, up from 1.1571 late Tuesday in New York. Just last week, investors were worried the shared eurozone currency would break through $1.13.
Similarly, the Brexit-battered British pound GBPUSD, +0.0543% hovered near two-week highs at $1.2905, little changed from Tuesday. Following talks between Brussels and London on Tuesday, chief European Union negotiator Michel Barnier said Brexit talks would now be continuous.
