The U.S. Dollar edged lower against a basket of currencies on Wednesday. The move was driven by a firmer Euro and a surge in commodity currencies such as the Canadian and Australian Dollars.
March U.S. Dollar Index settled at 92.612, down 0.189 or -0.20%.
The U.S. Dollar has been trending lower since December 12, the day before the Fed raised interest rates for the third time in 2017, while issuing a forecast of only three rate hikes in 2018. There have been very few events to drive the dollar higher lately. Even the passage of the U.S. government’s massive tax overhaul plan last week was not helping to support the greenback.
The Australian Dollar reached a two-month high on Wednesday, led by higher prices for metals and oil. The commodity-driven currency hit its highest level since October 25, putting it in a position to end the year about 7 percent higher after posting losses in each of the past four years.
The AUD/USD settled at .7714, up 0.0075 or +0.98%.
New Zealand Dollar
The New Zealand Dollar advanced to its highest level since October 19, boosted by data last week that showed New Zealand’s economic growth beat expectations in the third quarter. New Zealand’s gross domestic product rose 0.6 percent in the three months ended September 30 with annual expansion at a healthy 2.7 percent.
The NZD/USD settled at .7061, up 0.0023 or +0.33%.
The Kiwi is in a position to close over 2.00 percent higher for the year. Nearly matching the previous year’s performance.
The Dollar/Yen struggled for a fourth day on Wednesday before closing slightly better. The Forex pair was supported by increased demand for higher-yielding assets.
The USD/JPY settled at 113.324, up 0.096 or +0.08%.
Earlier in the week, Japan’s core consumer prices rose for the 11th straight month, up 0.9 percent year-on-year, and household spending jumped in November.
On Tuesday, Japanese Prime Minister Shinzo Abe urged companies to raise wages by 3 percent or more next year, keeping up pressure on firms to spend their huge cash pile on wages to broaden the benefits of his “Abenomics” stimulus policies.
Additionally, minutes of the BoJ’s October meeting, released on Tuesday, showed most members shared the view that the central bank should maintain its easy policy. The BOJ kept monetary policy steady last week and its governor reassured markets the central bank will lag well behind overseas peers in ending its ultra-easy policies.
This article was originally posted on FX Empire
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