- FOMC confirms July’s rate cut was policy calibration.
- USD/JPY pair shows limited reaction to FOMC minutes.
- US Dollar Index drops below 98.20 following initial spike.
The USD/JPY pair retreated from its session highs after the FOMC published the minutes of its July 30-31 meeting and caused the Greenback to weaken modestly. As of writing, the pair was still up 0.2% on the day at 106.44.
Subdued market action continues after FOMC
In its publication, the FOMC noted that a couple of policymakers preferred a 50 basis point rate cut to address the low inflation. However, the FOMC further added that most policymakers viewed the decision to cut the policy rate by 25 basis point as a recalibration of the policy to reflect Chairman Powell’s neutral tone in the last press conference and didn’t allow the USD to weaken sharply.
“Policymakers generally favored an approach that avoided any appearance of the Fed being on a preset course,” the statement read. The US Dollar Index, which spiked to 98.26, is now posting small daily gains at 98.18.
Although the 10-year US Treasury bond yield erased its daily gains in the last hour, Wall Street’s three main indexes still gain around 1%, suggesting that the impact of the FOMC minutes on the market sentiment was limited.
In the early trading hours of the Asian session on Friday, the Nikkei Manufacturing PMI from Japan will be looked upon for fresh impetus.
Technical levels to watch for
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