Dollar Ends Week Relatively Subdued

The US dollar ended this week’s mostly flat due to the mixed minutes of the latest meeting of the Federal Open Market Committee. The greenback was far from being the weakest currency, though, as the Great Britain pound logged even bigger losses, mostly due to politics.

Markets considered the FOMC minutes to be dovish and sent the dollar down. But in truth, the notes had both dovish and hawkish remarks, signaling that the US policy makers expect another interest rate hike soon. Markets interpreted that as a sign that a June hike is almost guaranteed, and the CME FedWatch tool currently shows more than 80% probability of such of an event.

Britain’s pound fell mostly due to polls showing that Conservative party of UK Prime Minister Theresa May is losing support, though the surprise downward revision of nation’s gross domestic product was not helping the currency either. May hoped that a snap election will help her to solidify power, in turn helping her to have stronger positions in negotiating with the European Union about the Brexit details. Yet polls show that the actual outcome of the voting may be completely opposite.

The Bank of Canada released a policy statement that was surprisingly optimistic. It allowed the Canadian dollar to ignore the negative impact of crude oil prices, which were down on the week.

EUR/USD opened at 1.1195, rose to the weekly high 1.1267, but retreated to end the week at 1.1180. GBP/USD dropped 1.4% from 1.2989 to 1.2806. USD/CAD slid from 1.3515 to 1.3446.

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