Will FOMC Minutes Boost or Break the Dollar?

Posted on

Market Drivers October 11, 2017
Euro hits session highs
Market looks to FOMC minutes
Nikkei 0.27% Dax 0.03%
Oil $51/bbl
Gold $1289/oz.

Europe and Asia:
No Data

North America:
USD FOMC minutes 14:00

It been a very quiet night in the FX markets with almost no economic data on the docket to drive flow, but EURUSD continued its recovery hitting session highs of 1.1840 as markets remain upbeat about the prospects of an ECB taper.

Cable, on the other hand, was decidedly weaker as it struggled to hold the 1.3200 figure. In an extraordinary interview yesterday Theresa May refused to confirm that she would vote for Brexit if a second vote was taken today essentially implying that the leader of the process does not support it.

Elsewhere, the Australian dollar was better bid as well, boosted by the best Westpac consumer confidence readings in more than a year. The pair traded to .7800 but stalled at the round figure and traded in a very narrow range for the rest of London trade.

Overall, FX remained at a standstill as traders awaited the FOMC minutes due later today. The market is anticipating a hawkish tone from the report, but if the minutes show a diversity of opinions rather than strong consensus, the dollar could see further weakness on the release of the minutes.

Although Chairwoman Yellen appears to be fully convinced that a rate hike in December is due, if she does not have the full support of the board, the chance of an actual rate hike could diminish significantly. Right now the markets are pricing a 78% probability that Fed hikes rates. However, today’s minutes could send those odds tumbling down and drag the buck with it. USDJPY remains weak and is essentially in a sell the rally mode after failing to hold the 113.00 level after Friday’s NFPs. Any weakness in today’s FOMC minutes could send it towards the 111.50 support.

Boris Schlossberg
Managing Director

Leave a Reply

Your email address will not be published. Required fields are marked *