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Daily Brief, Jan 03: Economic Events Outlook – Eyes on FOMC Meeting Minutes

Good morning, traders.

It’s a big day from fundamentals’ viewpoint as most traders will focus on the FOMC meeting minutes and ISM manufacturing PMI data from the US. Currently, the market is pricing in dovish FOMC meeting minutes because the Fed Chair Jerome Powell said last time that they are likely to keep rates on hold until mid-2020. Chances are high that the Fed Chair may keep the same stance today. If that happens, the dollar weakens further, but sooner or later we can expect profit-taking in dollar selling and GOLD buying. Let’s keep an eye on all dollar related securities today.

The central bank of China announced on Wednesday that $15B from the banking system would be unleashed to support the economy. This announcement came after a continuous decline in growth even though China and the US are preparing to sign a phase-one trade deal in mid-January. This move from China to boost its economic growth lifted the risk appetite from the market and kicked off the US stocks to touch record high levels in the New Year.

Watchlist – Top Economic Events to Follow Today

ISM Manufacturing PMI – 15:00 GMT
The Institute for Supply Management is due to release US ISM Manufacturing PMI figure, which still stays below 50, signifying the contraction in the economy.

It’s a survey of about 400 purchasing managers, which asks respondents to rate the relative level of business conditions, including employment, production, new orders, prices, supplier deliveries, and inventories.

Economists are expecting a slight surge in the ISM manufacturing PMI figure, which is likely to report a reading of 49 vs. 48.1 beforehand. It may help support the US dollar today

FOMC Meeting Minutes – 19:00 GMT

For beginners, the FOMC Meeting Minutes is a detailed record of the FOMC’s most recent meeting, providing in-depth insights into the economic and financial conditions that influenced their vote on where to set interest rates.

The Federal Reserve releases FOMC meeting minutes about eight times per year, three weeks after the Federal Funds Rate is announced.

The minutes from the December meeting may shed some light on the world’s most influential central bank. The Fed voted to lower rates for the second consecutive time and denied to mention if more interest rate cuts are imminent. Out of nine members of FOMC, thee officials voted against the unanimous verdict.

Now the question prevails, are hawkish policy sentiments gaining control? Conversely, is the US Federal Reserve becoming more concerned about global issues?

Traders will be looking to find clues on the next policy decision and if the central bank signals further rate cuts.

USD – Crude Oil Inventories – 16:30 GMT

The Energy Information Administration is due to release the inventory data with a forecast of -3.1M build in inventories vs. -5.5M inventories build during the previous week.

As per the API (American Petroleum Institute) report, crude oil stocks slipped by 7.8 million barrels for the week ended December 27, which is a good sign as it reflects a rise in oil demand.

For now, WTI crude oil is facing slight bullish bias ahead of the EIA report as traders are expecting the EIA to report a draw in inventories due to its positive correlation with the API report.

That’s it for now, but do check FX Leaders’ economic calendar for the live coverage of these significant events.

Good luck!

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Arslan Butt
Index & Commodity Analyst
Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics.His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker.His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.
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