The greenback remains lower on Wednesday ahead of Federal Reserve Chair Janet Yellen’s upcoming speech. Investors are weary over speculation that Yellen will be replaced next year, leading to a further boost for the dollar.
U.S. job data last month caused little reaction after 135,000 private sector jobs were added.
U.S. service sector activity expanded at its fastest rate in 12 years in September, helping support the greenback on Wednesday and moving it off of session lows.
Yellen is slated to be replaced next February. Two candidates were interviewed for the position last week: James Powell and Kevin Warsh. Powell is a former Federal Governor, while Warsh is a former governor. Powell is considered to have a dovish approach.
Warsh is speculated to be the leading candidate to replace Yellen, which helped strengthen the dollar earlier in the week. Potential U.S. tax reform also supported the dollar earlier in the week as the Trump administration outlined plans that would cut taxes for most Americans.
USD/JPY is down 0.13%, USD/CAD is down 0.02% and USD/CNH is also down 0.33% in mid-morning trade on Wednesday.
EUR/USD is up 0.12%, while GBP/USD is up 0.39%.
European investors are awaiting a speech by European Central Bank President Mario Draghi, scheduled at 1:15 pm today. The speech coincides with a speech that Yellen will give later in the day. Investors will await both speeches to dissect them for any hint at a potential rate hike in the future in the United States and policy changes in Europe.
The sterling has eased off of two-and-a-half week lows after reports that the country’s services sector expanded faster than forecasted in September.
The euro’s gains are expected to remain limited for the remainder of the week, as turmoil in Spain continues to mount. Catalonia is under a general strike on Tuesday, which added to tensions with Spain following a vote for independence in the wealthy region.
King Felipe VI of Spain has accused Catalan of being divided by secessionist leaders. Catalan leaders have stated that they will declare their independence from Spain in a matter of days. The King’s comments sent financial investors into a frenzy, dumping stocks and sending the IBEX index down more than 2%.
Protests in Spain continued on Tuesday, as demonstrators fought back against the violence that injured over 850 people. Police tried to close polling stations and used excessive force to stop voters from casting their vote for independence. Madrid classified the vote as illegal. Voters voted 90% in favor of a referendum.