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FOMC Minutes sees economy on track, reflects new hawkish

The FOMC meeting minutes show that the Fed sees the economy on track. However, there was a discussion about adjusting the forward guidance and even some that suggested raising the rate sooner rather than later. These are the minutes from the January Fed decision in which the Fed tapered bond buys for the second time. It was Bernanke’s last decision.

Before the publication, EUR/USD was trading around 1.3747, a bit lower than beforehand. It is now down to 1.3735. USD/JPY was around 102.27 and now above 102.40. GBP/USD around 1.67 and now lost this level. USD/CAD stands out with a small drop after a straightforward rise earlier in the day.

Some of the participants that said it would soon be appropriate to change guidance on the first rate rise: to bring it forward. And, “several” wanted to send an explicit message that QE would be cut by $10 billion in every meeting.

On the other hand, “a number of officials” said the tapering should be modified if the economy slows down.

Similar to the BOE, also the Fed seems pleased with its communications: it says that market expectations are aligned with the Fed’s view.

Recent data from the US economy has been weak, but many blamed the weakness on the bad weather. The recurring line from the Fed is that QE tapering is on track, and only severe data will derail the train from the track.

The composition of the Fed has become more hawkish.

More:  Janet Yellen’s testimony calms markets

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.