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US Dollar Ends Week Soft amid No Rate Hikes Outlook

January 12, 2019 at 21:50 by Vladimir Vyun

A USD bill sloping downwardsThe US dollar fell against most other currencies over the week as traders were becoming more and more convinced that the Federal Reserve may perform no interest rate hikes at all this year.

The major hit for the greenback came from the monetary policy minutes of the Federal Reserve that talked about patience in determining timing of the next interest rate hike. While comments of Fed Chairman Jerome Powell about reduction of balance sheet supported the currency initially, he and other Fed members were also mentioning patience in monetary policy decisions. As a result, CME FedWatch shows more than 70% chance that interest rates will remain the same by the end of 2019.

Meanwhile, the Great Britain pound was very strong thanks to the positive developments in the Brexit story. There were reports that the Brexit may be delayed, and there are even rumors about second referendum, which may end in no Brexit after all.

EUR/USD was up from 1.1397 to 1.1468, though retreated from the weekly high of 1.1570. GBP/USD advanced from 1.2717 to 1.2830. USD/JPY ended the week basically unchanged at 108.50 as the Japanese yen was also extremely weak due to risk appetite prevailing on markets.

If you have any questions, comments, or opinions regarding the US Dollar, feel free to post them using the commentary form below.

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