The Federal Open Market Committee minutes have been released which are so far sending the US dollar DXY index a touch softer. The softness in the greenback come as there were no discussions on larger rate hikes.
At the May 3-4 meeting, the Fed hiked rates from the expected 50 bp to 1.0% and laid out plans for aggressive Quantitative Tightening to begin in June.
FOMC Minutes
- All participants at the Federal Reserves May policy meeting agreed a half-percentage-point interest rate hike was appropriate; 'most' Judged such hikes appropriate at the next couple of meetings, minutes from May 3-4 meeting show.
- All Fed participants agreed the US economy was 'very strong,' labour market was 'extremely tight' and inflation was 'very high,' minutes show.
- Participants agreed fed should 'expeditiously' move monetary policy toward a more neutral stance, and that a 'restrictive' stance on the policy may well become appropriate, minutes show.
- Fed participants saw the Ukraine conflict, china's covid lockdowns posing 'heightened risks,' with particular challenges to restoring price Stability while maintaining a strong job market, minutes show.
- Many participants judged faster removal of policy accommodation would leave the fed 'well-positioned' to assess later this year What further adjustments were needed, minutes show.
- Fed participants emphasized that they were 'highly attentive' to inflation risks and agreed those risks were skewed to the upside, minutes show.
- All participants supported plans to reduce the size of the Fed's balance sheet; 'a number' said after the runoff was well underway, it would be appropriate to consider sales of mortgage-backed securities, and minutes show.
- Participants said Q1 2022 GDP decline contained 'little signal about subsequent growth,' and they expected real GDP would grow 'solidly' in Q2 and be near or above trend for the whole year.
Meanwhile, analysts at Brown Brothers Harriman said, ''our base case remains for another 50 bp hike in September that takes the Fed Funds ceiling up to 2.5%, which many consider close to neutral. However, it’s worth noting that odds of a 50 bp move in September have fallen to less than 50% now from fully priced in at the start of May.''
DXY reaction so far...
This was the knee jerk reaction that propelled the euro higher from support as follows, in accordance with the pre-event analysis:
EUR/USD technical analysis
For the minutes and sessions ahead, the pair could be based here and result in a higher correction from support:
The softness in the greenback come as there were no discussions on larger rate hikes.
About the FOMC minutes
FOMC stands for The Federal Open Market Committee organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0800 after US data
EUR/USD has lost its traction and declined toward 1.0800 with the initial reaction to the upbeat consumer confidence data from the US. Meanwhile, Wall Street's negative opening seems to be helping the US Dollar find its footing and making it hard for the pair to stretch higher.
GBP/USD clings to modest daily gains near 1.2300
GBP/USD has retreated to the 1.2300 area in the early American session with the US Dollar finding demand amid the negative shift witnessed in risk mood. The data from the US revealed that the CB Consumer Confidence Index rose modestly in March.
Gold pulls away from session highs, holds near $1,960
After having climbed toward $1,970 earlier in the day, Gold price erased a portion of its daily gains and retreated to the $1,960 area. The benchmark 10-year US Treasury bond yield stays in positive territory above 3.5%, not allowing XAU/USD to gather further bullish momentum.
Ethereum (ETH) options traders turn bearish ahead of the token unlock
Ethereum is holding steady above the $1,700 level despite slight bearish sentiment among options traders. Analysts have noted a rise in open interest in Ethereum, as co-founder Lubin assures that the altcoin is not a security.
S&P 500: With banking crisis in rear view, market pushes index closer to 4,000
The S&P 500 on Monday moved ahead cautiously without much fanfare after the US government agreed to sell $72 billion worth of Silicon Valley Bank assets to First Citizens Bank (FCNCA).