This is certainly shaping up to be another painful trading week for the Dollar. Bulls were nowhere to be found during Thursday’s trading session, despite the release of yesterday’s somewhat hawkish Federal Reserve minutes. While policymakers expressed optimism over the U.S. labor markets, and believe that tax cuts could stimulate consumer spending, concerns over low levels of inflation lingered throughout the meeting minutes.
Market players marched into the 2017 trading year adopting a risk-on attitude, amid growing optimism over Donald Trump pushing ahead with a large fiscal spending package. The “trump effect” not only elevated global stocks to 19-month highs in January, but also sent the U.S. dollar to its highest level in 14 years.
Global equity markets struggled for direction during Wednesday’s trading session, with investors on the fence as activity continued to decelerate ahead of the upcoming Christmas holiday break. Sterling nudged higher against the Dollar on Wednesday morning as market players awaited Bank of England Governor Mark Carney‘s appearance before Parliament.
The British pound’s appreciation against the dollar was short lived during Tuesday’s trading session as investors evaluated the likely impact of UK inflation climbing to its highest level in almost six years.