U.S. Dollar Well Bid Ahead Of FOMC Minutes

The International foreign exchange blacklist in 2018US dollar regained ground on Wednesday after yesterday’s plunge to a one-month low of 101.65. The USD index is back above the 102.00 figure, challenging the 102.30 zone as the New York session begins. In part, the renewed demand for the safe-haven greenback is due to a risk-off tone that remerged in the global financial markets after a short-lived bounce in stocks.

While major European indexes are holding slightly above the flat-line, Wall Street benchmarks opened in negative territory, looking set to extend yesterday’s decline. Fresh data from the United States showed that durable goods orders rose by 0.4% month-over-month in April versus +0.6% expected.

Core durable goods orders came in at +0.3%, also below expectations for a 0.6% rise. In a knee-jerk reaction, the buck experienced some weakness, retreating from a session high of 102.45, but stayed resilient eventually. Now, the market focus shifts to the FOMC meeting minutes due later today. The central bank is widely expected to express a hawkish tone that would play a key role in driving the USD demand.

Should the Fed deliver clues about the possibility of a 75 bps rate hike, the greenback will rally across the board. Otherwise, the USD bulls could be disappointed. Also, the dollar will continue to monitor developments in the financial markets where sentiment remains unstable, with investors staying nervous amid persistent inflation, economic, and geopolitical concerns.

In this context, the buck remains buoyed by a risk-off tone dominating global markets this year. In other words, a broader uptrend for the USD remains intact, albeit the momentum is slowing amid more hawkish signals from the ECB.

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