FOMC minutes keep December door wide open – USD wobbles

Some members are concerned that wording change is too strong. The lift off depends on data. The options are open for December. They wanted to convey that a December liftoff may be appropriate. Most agreed on gradual accommodation removal. They also saw diminished risks from abroad.

The US dollar is stronger initially but changing course quite quickly.

They did note that lower oil  prices could result in bankruptcies in that sector.

The Federal Reserve released the minutes from the October 28th meeting, in which it made a hint towards a hike in December and also sounded hawkish on other fronts.

The dollar was looking strong before the release.

In that meeting, the Fed reiterated that long term inflation expectations are stable. On employment, it did acknowledge a slump (seen in August and September) but still seeing the slack diminishing.

Since then we had the blockbuster NFP, which even showed a breakout in wages. While the minutes are supposed to reflect the meeting, it is important to note that they are revised towards their publication until the last moment.

Currencies

• EUR/USD traded around 1.0640 towards the release, also pressured by the ECB’s intention to  introduce more monetary stimulus. A new low of 1.0616 was reached before things stabilized.
• GBP/USD was around 1.5220, stable within the range and expecting a UK rate hike as well. Cable maintained support in the initial rush.
• USD/JPY traded on high ground at 1.2350, just under resistance at 123.60. 123.75 was the swing high.
• USD/CAD was around 1.3350, pressured by oil prices. The pair is falling after the first rise.
• AUD/USD had a good week, but also lost ground towards the minutes at 0.7080. No change is seen.
• NZD/USD reached new lows at 0.6440, pushed down also by milk prices. Steady she goes.

More:  EUR/USD to parity by year end – Goldman Sachs

In our latest podcast we discuss the December decision driving  the dollar,  declining oil and more:

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