What to Watch in Today's FOMC Minutes?
What Are the FOMC Minutes?
The latest set of FOMC minutes are due later today and as always, traders are bracing for potential market moving details. The minutes essentially lay out the finer details of the discussions which took place at the last FOMC meeting. As such, the minutes can often be helpful in adding clarity for traders and revealing dovish or hawkish signals to help traders align their positions in the markets.
What Happened at The Meeting?
The Fed held rates unchanged at the March meeting while sticking to its view that three rate cuts will likely be appropriate this year. Powell noted that the bank had made substantial progress on bringing inflation down to target, and remained committed to doing so, while the labour market had also remained very strong. The bank noted that it would retain a data-dependent approach to policy decisions and left the timing for a first rate cut open.
What to Watch in the Minutes?
Typically, traders are looking for dovish or hawkish signals. Dovish, meaning anything signalling rate-cuts or holding rates steady and hawkish meaning anything signalling rate-hikes or removal of support. In today’s minutes, the focus will be on timing signals.
Traders will be looking to see whether there is any sense of when the Fed is likely to hike. If members are seen discussing a particular month, such as June, as a likely easing date, this should be bearish for USD. However, if members refrain from any specific timing signals or show high uncertainty around timing, this will likely be bullish for USD near-term.
Additional Notes
Ahead of today’s minutes we have the latest US inflation data due. This is a high priority release and has elevated volatility risk. As such, today’s release might impact the relevance of the minutes. For example, if inflation is seen dropping sharply below forecasts, this will be bearish for USD even if the FOMC minutes don’t have any clear bearish signals.
Technical Views
DXY
The failure at the 104.95 level has seen the market trailing back down to retest the broken bear channel highs, just ahead of support at 103.48. While this area holds, focus is on a continuation higher and a breakout above 104.95. Below here, 102.49 is the next support to note.
.png)
Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Futures and Options: Trading futures and options on margin carries a high degree of risk and may result in losses exceeding your initial investment. These products are not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.
With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.