CURRENCIES: Dollar Weakens After Fed Minutes, Trump's Business Councils Disband

Pound firms after jobless data release

The U.S. dollar weakened on Wednesday afternoon, erasing earlier gains, as traders reacted to the one-two punch of the dissolution of a pair of business advisory groups to the White House, and a dovish read of minute from the Federal Reserve's July meeting.

President Donald Trump's manufacturing council and his strategy & policy forum were disbanded, which he tweeted midday Wednesday (https://twitter.com/realDonaldTrump/status/897869174323728385), after a wave of CEOs stepped down from his advisory panels in the wake of Trump's reaction and recent remarks about a deadly clash this weekend centered on a white-supremacist protests in Charlottesville, Va.

The termination of Trump's economic councils casts doubt on the U.S. leader's ability to forge the type of collaboration inside and outside of Washington to enact dollar-boosting, pro-growth reforms that had been the linchpin of his political campaign, including tax cuts, infrastructure spending and regulation.

Gyrations in the dollar on Wednesday, sparked by the political drama, come on a day in which the Fed's minutes were expected to be the main catalyst for the buck. However, the Fed minutes, an account of its meeting last month, may have offered little for dollar bulls to cheer about.

"The market was really hoping for some clarity from the Fed, but we have no more insight than before," said Lennon Sweeting, head of corporate trading & chief market strategist at XE.com, a currency-related data and service provider. "Expectations for another rate hike this year are pretty much diminished now."

Fed minutes indicated (http://www.marketwatch.com/story/some-fed-members-say-bank-can-be-patient-on-interest-rates-due-to-low-inflation-2017-08-16) that some committee members were ready to announce a date back in July, while other preferred to wait until September, but also highlighted an intense debate about the pace of inflation, which has fallen below the central bank's 2% target, calling into question the ability of the policy makers to continue to lift rates more rapidly. Inflation running at around 2% is seen as a sign of a healthy functioning economy.

Earlier in the session, investors digested U.S. housing starts and building permits. which were weaker than expected. Housing starts came in at 1.155 million, compared with 1.225 million expected, while building permits were reported at 1.223 million, versus the consensus estimate of 1.250 million. Both indicators showed a decrease compared with the previous month.

The dollar gauge is down 0.3% at 93.5170, compared to 93.9590 earlier on Wednesday.

Read:Trump rips 'alt-left' as he again blames both sides for Charlottesville violence (http://www.marketwatch.com/story/trump-rips-alt-left-as-he-again-blames-both-sides-for-charlottesville-violence-2017-08-15)

Against the yen, the dollar weakened to Yen110.16, compared with an intraday high of Yen110.94, and Yen110.68 late Tuesday in New York. The euro rose against greenback, changing hands at $1.1769, compared with $1.1708 earlier and $1.1736 in late Tuesday trade.

The euro initially weakened on Wednesday after Reuters reported (https://uk.reuters.com/article/uk-ecb-policy-draghi-idUKKCN1AW0LL) that European Central Bank President Mario Draghi won't deliver a fresh policy message at the Fed's Jackson Hole conference in Wyoming next week.

Meanwhile, the pound strengthened to $1.2881 after data showed the U.K. June unemployment rate fell to 4.4% from the 4.5% expected by some economists and analysts. The pound was trading at $1.2854 just ahead of that report. Meanwhile, June wages rose 2.1%, including bonuses, versus an estimate of 1.8%.

(END) Dow Jones Newswires

August 16, 2017 15:32 ET (19:32 GMT)