FOMC Minutes: Almost no probability of implementing negative policy rates

Eren Sengezer FXStreet

Respondents to open market desk surveys discussed in April meeting saw almost no probability to the FOMC implementing negative policy rate, the FOMC Minutes showed on Wednesday.

Market reaction

The US Dollar Index paid little to no mind to this headline and was last seen losing 0.44% on the day at 99.14.

Additional takeaways

"Participants agreed that recent actions taken by the federal reserve were essential in helping reduce downside risks to the economic outlook."

"A few participants noted that higher levels of government indebtedness could put downward pressure on growth in aggregate potential output."

"Participants were concerned that banks could come under greater stress, particularly if adverse scenarios for the spread of the pandemic and economic activity were realized, and so this sector should be monitored carefully."

"Upcoming financial stress tests for banks were seen as important for measuring the ability of large banks to withstand future downside scenarios."

"All participants judged that it would be appropriate to maintain the target range for the federal funds rate at 0 to 0.25%."

"The Committee is prepared to adjust its asset purchase plans as appropriate to support smooth functioning in the markets for these securities."

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD looks sidelined around 1.1850

EUR/USD remains on the back foot, extending its bearish tone and sliding towards the 1.1850 area to print fresh daily lows on Monday. The move lower comes as the US Dollar gathers modest traction, with thin liquidity and subdued volatility amplifying price swings amid the US market holiday.

GBP/USD flirts with daily lows near 1.3630

GBP/USD has quickly given back Friday’s solid gains, turning lower at the start of the week and drifting back towards the 1.3630 area. The focus now shifts squarely to Tuesday’s UK labour market report, which is likely to keep the quid firmly in the spotlight and could set the tone for Cable’s next move.

Gold battle around $5,000 continues

Gold is giving back part of Friday’s sharp rebound, deflating below the key $5,000 mark per troy ounce as the new week gets underway. Modest gains in the US Dollar are keeping the metal in check, while thin trading conditions, due to the Presidents Day holiday in the US, are adding to the choppy and hesitant tone across markets.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.