- The US Dollar is falling with significant drops against commodity currencies.
- The arrest of former Trump adviser Stone and reports about the Fed's dovishness weigh.
- The ongoing shutdown does not help, and there's no end in sight.
The US Dollar is falling against the recovering euro and more prominently against commodity currencies. Why is the greenback grinding lower? Here are the reasons.
1) Roger Stone arrested
Roger Stone, a former adviser to Donald Trump, was arrested in Florida. He is being charged with lying about his cooperation with Wikileaks about the release of damaging material against Hillary Clinton in the campaign. He is also accused of lying about his relations with the Trump campaign.
The story complicates the President's legal issues. Former campaign manager Paul Manafort will also appear in court today.
Trump's policies boosted the US Dollar, and his issues weigh on the greenback.
2) Fed doves fly
The Wall Street Journal reported that the Fed is discussing ending the balance sheet reduction earlier than expected. That would be a full turnaround for Fed Chair Jerome Powell. In the previous rate decision, he said that the balance sheet reduction would continue "autopilot." He made other sounds since then, about both rates and the balance sheet.
If the Fed announces a policy change already in its upcoming decision, it implies more US Dollars floating in markets, devaluing the American currency.
3) Ongoing shutdown
The most extended US government shutdown has no end in sight. After the Senate rejected two competing bills to reopen the government, the Trump Administration floated an idea to temporarily open the government if Democrats approve a downpayment for the wall. Democrats rejected this quite quickly.
The shutdown is taking an economic toll on the US. Top White House Economic Adviser Hassett said that growth could be 0% in Q1 2019 if the shutdown continues.
All in all, it's not a happy Friday for the world's reserve currency.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD drops to near 1.0850, further support at nine-day EMA
EUR/USD continues to lose ground, trading around 1.0860 during the Asian hours on Friday. From a technical perspective on a daily chart analysis indicates a sideways trend for the pair as it continues to lie within the symmetrical triangle.
GBP/USD posts modest gains above 1.2650, focus on the Fedspeak
The GBP/USD pair posts modest gains near 1.2670 during the Asian session on Friday. Meanwhile, the USD Index recovers some lost ground after retracing to multi-week lows near 104.00 in the previous session.
Gold price loses momentum, with Fed speakers in focus
Gold price trades with a bearish bias on Friday after retreating from the nearly $2,400 barrier. The bullish move of precious metals in the previous sessions was bolstered by the softer-than-expected US inflation data in April, which triggered hope for rate cuts from the US Federal Reserve.
LINK price jumps 10% as Chainlink races toward tokenization of funds
Chainlink price has remained range-bound for a while, stuck between the $16.00 roadblock to the upside and $13.08 to the downside. However, in light of recent revelations, the token may have further upside potential.
Fed speak tempers rate cut expectations
The biggest takeaway into Friday is the latest round of Fed speak. These Fed officials reiterated their stance rates should be kept restrictive for a longer period of time until there is more clear evidence inflation is heading back towards the 2% target.