The US dollar dipped against most of its counterparts when the FOMC minutes were released as it revealed that some policymakers had some doubts about tightening in December. In particular, the minutes indicated that many members were worried that the factors dragging inflation down might not be transitory. A couple of FOMC members are set to give testimonies today and the PPI figures will be released, giving traders some insight as to how the actual CPI readings might turn out on Friday.
The euro continued its relief rally after Spanish PM Rajoy gave Catalonia an 8-day ultimatum to officially declare independence. There were no reports due from the euro zone then so this display of authority eased political uncertainty. Euro zone industrial production and French final CPI numbers are due next, with upbeat figures likely to put the focus back on ECB tapering expectations.
The pound also staged a rally as Brexit updates were no longer in the limelight. There were no reports out of the UK economy then while today has the BOE credit conditions survey lined up. Finance Minister Hammond said that they are looking into the realistic worst case scenario but has yet to set a budget for a no-deal Brexit.
The franc gave up ground to its peers on improving risk appetite stemming from weaker odds of a Fed December hike. There were no reports out of the Swiss economy then and none are due today so market sentiment could remain the driver of franc price action.
The Japanese yen was also in a weak spot, reacting to market sentiment rather than taking advantage of dollar weakness. Data from Japan was stronger than expected as core machinery orders rose 3.4% versus the projected 0.8% uptick while preliminary machine tool orders increased 45.3%. Earlier today, bank lending was also reported to have shown a larger than expected 3% gain.
Commodity Currencies (AUD, NZD, CAD)
The comdolls rallied on returning risk appetite as the FOMC minutes suggested weaker odds of December tightening. However, New Zealand reported a 0.2% dip in the food price index after previously posting a 0.6% gain. US crude oil inventories data is due next and a speech by BOC member Wilkins is lined up.