The FOMC meeting minutes lean to the dovish side, with several members saying the statement overstates the rate rise pace. These are the minutes for the first FOMC meeting under Chair Janet Yellen. In that decision, the Fed dropped the forward guidance and just said that low rates would remain at hand for a long time after the bond buying program (QE) ends. In the accompanying press conference, Yellen surprised by saying that a considerable time is “6 months”. This gave a boost to the greenback. In the meantime, it lost its shine, even though nothing has really changed in the big picture of the US economy.
The US dollar was on the back foot in the past few days, in a late reaction to the not so impressive Non Farm Payrolls. EUR/USD traded around 1.38, USD/JPY at 102 and GBP/USD at 1.6730. The dollar is now extending its drops. — more coming —
The minutes certainly counter the reaction from the statement two weeks ago.
Unsurprisingly, the “6 months” comment from Janet Yellen in the presser does not appear in the minutes. Members stated that the change in the forward guidance does not imply a change in policy intentions. The minutes also mention the impact of weather on the economy, but this is far from surprising either, as this stance was voiced by various FOMC members in numerous public appearances.
- EUR/USD is up to 1.3835, confirming the break above the second downtrend resistance line.
- USD/JPY is down to 101.85.
- GBP/USD is up to 1.6767. The better manufacturing production figure earlier in the week gave it the big boost.
- AUD/USD is already above 0.9370. The pair struggled in the previous week but eventually made the big break above 0.93 to a new 2014 high.
- USD/CAD digs deeper after reaching a 3 month low under 1.09 earlier in the day.
This is not the first time that the minutes send a somewhat different message than the statement. However, it is important to note that we are now reading a snapshot of the Fed’s view from two weeks ago. This is not fresh, even though nothing has materially changed.
More Fed speakers will continue to rock the boat. The jobless claims figure tomorrow will be of interest as always.