Abstract:US Dollar Pares Gains Despite Hawkish Tone in FOMC Minutes
US Dollar peels back from session highs despite relatively hawkish FOMC minutes
DXY Index erases intraday gains to trade little changed with Fed hawks uninspired
Upcoming jobless claims and CPI data due for release could guide USD price action
Check out our Real Time News page for timely market news and analysis
US Dollar price action is coming under a bit of pressure during Wednesday afternoon trade. The broader DXY Index is now flat on the session after being up as much as 0.3% intraday. Downward pressure on the USD seems to coincide with the release of June 15-16 Fed meeting minutes just crossing market wires. It appears that the FOMC minutes, which arguably are backward looking and stale, have failed to fuel an extension of the US Dollar rally ignited by the risk of a hawkish shift in Fed policy three weeks ago.
The latest round of FOMC minutes noted how Fed officials “agreed to continue assessing the economy‘s progress toward the Committee’s goals and to begin to discuss their plans for adjusting the path and composition of asset purchases.” Furthermore, the FOMC minutes indicated that “participants generally judged that, as a matter of prudent planning, it was important to be well positioned to reduce the pace of asset purchases, if appropriate, in response to unexpected economic developments, including faster-than-anticipated progress toward the Committees goals.”
DXY INDEX – US DOLLAR PRICE CHART: 4-HOUR TIME FRAME (15 JUNE TO 07 JULY 2021)Not to mention, a “substantial majority of participants” stated how the risk to inflation outlook is tilted to the upside. This compares to only “a number of participants” highlighting the same concern in the April Fed meeting minutes. Most officials still expect the inflation jump to subside nonetheless. Also, to be fair, the FOMC appears to be in agreement that their “standard of ‘substantial further progress’ was generally seen as not having yet been met.”
That said, this all seems to reiterate what the market has already been expecting, and largely priced in already since the June Fed meeting. Relatively muted price action across the DXY Index, major stock indices, and Treasury bonds in response to the latest FOMC minutes support this narrative. Fading bullish momentum behind the US Dollar also suggests that the counter-trend rebound may have run its course. Traders thus might want to consider having the upcoming release of weekly initial jobless claims and CPI data due tomorrow and next Tuesday, respectively, as possible catalysts for volatility given their potential to sway the Fed taper debate.
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
Easy Trading Online Broker Proud to be a trusted Forex trading platform. Fulfilling all the mentioned criteria, we provide: A trading platform that is easy to use and understand. Advanced market analysis tools To help you keep track of market changes and make effective trading decisions. Competitive trading fees It will help you save on your expenses. Professional customer support team Always available to advise when in doubt 24/7.
Easy Trading Online, a leading global CFDs broker regulated by ASIC, won the Best Online Trading Services Award at the BrokersView 2024 Award for Brokers with Outstanding Assessment·Middle East in Dubai. The award recognizes their excellence in trading services, leveraging technology and ensuring liquidity.
The Traders Fair Thailand 2024 was successfully held at Bangkok Shangri-La Hotel on February 3rd. As an exhibitor and sponsor, Easy Trading online attended the Expo with professional service team and extraodinary online trading experience on FX & CFDs.
Easy Trading Online, global CFDs & FX broker, is excited to announce its platinum sponsorship of the "Demo Trading World Cup Season 2." This sponsorship not only reinforces Easy Trading Online's commitment to the forex trading community but also highlights its status as nominated as one of the “the hottest brokers” and “the most popular brokers”in the popularity polls.