The US dollar demonstrated a tepid performance during the past trading week, rising against the euro, falling versus the Japanese yen, and the week close to the opening level against most other major currencies.
The week started good for the greenback, with dollar bulls hoping that the Federal Reserve policy minutes would suggest an interest rate hike in the near future. And indeed, the minutes were relatively hawkish, saying that monetary tightening may happen “fairly soon.” Yet markets, for some reason, were not impressed by the notes, driving the dollar down, not up.
Another blow to the US currency came from the new US Treasury Secretary Steven Mnuchin. He talked about tax cuts and other reforms planned by the Trump government, but the plans did not look particularly “phenomenal” like they were described by US President Donald Trump earlier. That put an end to the so-called “Trump trade” — an idea that government’s expansionary policies will boost inflation and force the Fed to implement monetary tightening faster.
EUR/USD slipped from 1.0607 to 1.0551. GBP/USD was up from 1.2407 to 1.2569 during the week but pulled back later to end trading at 1.2449. USD/JPY declined from 112.88 to 112.01 after rallying to the weekly high of 113.77.
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