Dollar hits fresh 3-month low after Fed’s dovish meeting minutes

Dollar hits fresh 3-month low after Fed’s dovish meeting minutes

Bank of Canada leaves interest rates unchanged; U.K. government loses key Brexit timetable vote

The U.S. dollar carved out a three-month low, deepening its losses during Wednesday’s trading session after the Federal Reserve’s December meeting minutes showed a dovish tilt in the central bank.

While multiple comments from officials, as well as a lowered expectations of rate increases in 2019 from three to two already pointed to a change of sentiment at the Fed, the minutes hammered that point home on Wednesday. Some central bank officials had been in favor of pausing the rate increases in December already, and many agreed that the Fed could be patient with their hikes going forward.

St. Louis Fed President James Bullard told The Wall Street Journal in an interview Tuesday that while he remained upbeat on the U.S. economy, the country could face a recession if the central bank raised interest rates further. Chicago Fed President Charles Evans, meanwhile, sees as many as three rate increases “eventually,” while Atlanta Fed President Raphael Bostic said he didn’t think the Fed should push rates above the neutral level, which represents a rate that neither impedes nor stimulates the economy.

The ICE U.S. Dollar Index DXY, -0.09% in response slipped to its session low, which marked a fresh three-month nadir. The gauge was last down 0.7% at 95.200, according to FactSet data. The EURUSD, +0.1819% rose to its best level since October at $1.1546, versus $1.1442 late Tuesday. Similarly, the British pound GBPUSD, -0.0078% climbed higher to $1.2796 from $1.2716, its highest since late November.

In other central bank news, the Bank of Canada kept its benchmark interest rate steady at 1.75% and downgraded its projections for 2019 gross domestic product growth to 1.7%, in part due to the drop in oil prices. Nevertheless, the Canadian dollar USDCAD, +0.1514% strengthened, with the greenback last buying C$1.3222, down from C$1.3274 late Tuesday.

As, U.S.-China trade talks appear to have ended on a positive not in Beijing, helping global stock indexes bounce. A statement was expected later Wednesday.

In Brexit matters, the U.K. government suffered two blows in parliamentary votes on Wednesday. First, 303 U.K. lawmakers backed an amendment that restricts the government from making changes to tax laws if it forces the country into a no-deal Brexit. Then, parliament voted in favor of the so-called Grieve amendment, which says that May’s government has three days to come up with an alternative if her Brexit deal gets voted down next Tuesday. Otherwise, control of Brexit reverts to Parliament.

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