Trump to Speak Before Congress on Feb 28
The U.S. dollar is mixed against majors as the Federal Open Market Committee (FOMC) minutes pointed to an interest rate hike “fairly soon” but were contrasted with cautious comments from Treasury Secretary Steven Mnuchin that have reduced expectations of pro-growth policies being introduced in the short term. House Speaker Paul Ryan invited President Trump at the end of January to speak before congress to deliver his first public address after his inauguration. This could be an opportunity to refocus his administration into pushing his anticipated fiscal stimulus and infrastructure spending policies.
The Bank of Canada (BoC) will release its rate statement on Wednesday, March 1 at 10:00 am EST (3:00 pm GMT). The Canadian central bank is anticipated to hold interest rates unchanged at 0.50 percent despite rising inflation. The loonie has gained as the price of crude remains strong after the Organization of the Petroleum Exporting Countries (OPEC) production cut agreement came in effect earlier in the year despite the increase in drilling activity in North America. Weekly U.S. crude inventories will be published on Wednesday, March 1 at 10:30 am EST (3:30 pm GMT).
The EUR/USD lost 0.459 percent in the last five days. The single currency is trading at 1.0562 after touching lows of 1.0494 in the middle of the week as the minutes from the Federal Open Market Committee (FOMC) were released. The lack of commitment from Fed officials despite the hawkish rhetoric is passing the buck to the Trump administration to be the one responsible for signalling when rates will rise.
French political anxiety was reduced as pro-European candidate Emmanuel Macron’s campaign is gathering momentum as one-time favourite Francois Fillon’s scandal has shaken the election’s outlook. The first round of the elections will take place on the 23 of April with low probability of a decisive win by candidates will force a second run between the top two candidates in early May. Polls now have Marie LePen and Emmanuel Macron going through to the run-off. Macron is then expected to get 59 percent of the vote making him the next French President.
The USD is also losing some momentum as the pro-growth policies promised by President Trump are now expected to come later in the year. Mnuchin’s comments about a significant tax reform passing by the August recess. Trump’s words before congress on February 28 could add some clarity to his economic agenda and in turn boost the USD, or if he intends to put priority on anti trade and immigration policies it could distract from the economic boost the Fed and the market are waiting for.