FOMC Minutes preview: Powerful Powell under scrutiny

The US Federal Reserve will release the Minutes of its June 12-13 monetary policy meeting this Thursday, when the central bank lifted rates by 25 bps to between 1.75% and 2%, as largely anticipated. Back then, the US Central Bank also upgraded its dot-plot to 4 rate hikes this year, something the market already foresaw and priced in ahead of the announcement. What pushed the greenback higher back then, were upbeat economic comments from Fed's Chair Jerome Powell,  combined with a dovish BCE the day afterward, with made Powell's comment even more powerful.

In the press conference following the announcement, Powell said that the level at which rates would have a neutral impact on the economy are still unclear, although the dot-plot showed that most Fed officials project that rates will be above 3.0% by 2020.

The Fed also changed its statement, offering a much more optimistic outlook on economic growth, and higher inflation expectations.  For growth, the committee, changed the "moderated" to "rising at a solid rate," although when talking about inflation, they reiterated that they had a "symmetric" 2% target, indicating that they won't be rushing to pull the trigger should inflation moves above the level.

Overall, the brief statement was hawkish, and investors will be looking into Minutes today to confirm such tone. The main things the market will be looking for will be:

• How the Fed assess the risk of Trump´s protectionist measures.
• How high rates can go before reaching the mentioned neutral level.

The market won't get any straight answer for any of both.  But will try to infer the answers from how policymakers voted, and which topic they discussed.

Finally, market's focus is on the trade war, and Friday, when US tariffs are expected to come into effect. The US will also release then its monthly employment report, which means that the reaction to the Minutes could be limited. Any case, safe-haven gold is probably the one to react more alongside with yen. In the case of the EUR/USD, here are the key levels to watch today.