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The Market Doesn’t Know What To Do With USD After FOMC Minutes

Posted Wednesday, July 5, 2017 by
Skerdian Meta • 1 min read

There were a lot of expectations from the FOMC minutes, as we mentioned in the previous forex update. Some were expecting a signal regarding an additional rate hike this year, besides the one in December.

If the FED signalled a rate hike in September, the USD would surge, if they strongly opposed such action, the Buck would decline, but not as much.

Some others were expecting some sort of signal about withdrawing some of the monetary stimulus, thus reducing the balance sheet, which again would send the Buck surging.

Inflation has softened lately as we have mentioned a few times, so the market was also very interested on what the FED had to say about this.

Well, the minutes were as balanced as they could be. Some members wanted to start withdrawing some stimulus in September, while others wanted to let it run further as it is. They acknowledged the softer inflation numbers that we´ve been talking about recently, but they also saw it as transitionary.

Rate hike odds remain unchanged after the minutes, so nothing changed, we´re at the same place we were before they were published, hence the uncertainty with the USD.

FED´s Powell will hold a speech tomorrow, so hopefully, he will shed some light. There´s also ISM non-manufacturing PMI and unemployment claims on the economic calendar tomorrow. The economic data will get additional attention now, so we´ll keep an eye out for this data as well.


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