US dollar index reverses and tumbles after FOMC minutes

Matías Salord FXStreet

The greenback initially rose after the release of the minutes from the latest FOMC meeting, but then reversed and trimmed gains. The US Dollar Index climbed to 100.88, hitting the highest level in three weeks and then dropped back toward 100.30/40.

Currently is trading unchanged for the day at 100.35, as the US dollar remains weak in the market, following the reversal.

The minutes showed no major surprises. The discussion about how to reduced the balance sheet presented more details and no relevant changes to the economic outlook were mentioned. “The minutes showed that most participants agree that allowing balance sheet to shrink later this year via a change to reinvestment policy would be appropriate. Furthermore, Fed meeting participants, in general, felt that the labor market continues to strengthen and the economic outlook hasn't changed much since January”, said analysts from Brown Brothers Harriman.

FOMC minutes: Fed participants 'generally preferred' to change reinvestment of both treasury and mortgage-backed securities

CME Group FedWatch: Market expectations for a June rate hike at 62.7%

Trend change in stocks and bonds

The bond market and equity prices also reversed sharply. US stocks indexes erased all gains with the Dow Jones losing more than 150 points after the minutes and it was up just 0.04%. In the bond market, the 10-year yield fell from 2.379% to 2.342% hitting a fresh daily low.

Author

Matías Salord

FXStreet

Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.

GBP/USD flies to two-week highs, targets 1.3400

GBP/USD trades well above the 1.3300 barrier on Thursday as the Greenback comes under renewed selling pressure following a softer-than-expected US NFP report in June. Meanwhile, Cable extends its multi-day recovery and looks to challenge 1.3400 sooner rather than later.

EUR/USD: Signs of life emerge above 1.1400

EUR/USD leaves behind two daily pullbacks in a row and advances to multi-day peaks near 1.1470 on Thursday, partially offsetting the sharp decline in place since June. The pair’s decline follows the intense retracement in the US Dollar, which is particularly sponsored by disheartening prints from June’s Payrolls and the sharp sell-off in USD/JPY. The US markets will be closed on Friday due to the Independence Day holiday.

Gold hits six-day tops past $4,100

Gold extends its bullish momentum on Thursday, climbing above the $4,100 mark per troy ounce to reach its highest level in a week. The precious metal’s sharp rebound comes as the US Dollar retreats following disappointing US NFP data.

Strategy's STRC volatility points to late Bitcoin cycle reset — Bitwise

The recent volatility surrounding Strategy's perpetual preferred stock, STRC, could signal that Bitcoin (BTC) is approaching a cycle bottom, according to Bitwise CIO Matt Hougan. In a Wednesday report, Hougan argued that the sharp decline in STRC and Strategy's MSTR stock should be viewed as "classic end-of-cycle dynamics" rather than evidence of a broader structural threat to Bitcoin.

The market may no longer be giving the Magnificent Seven a free pass

For much of the past three years, investing has felt surprisingly simple. Whenever markets stumbled, investors knew where to look. Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta and Tesla repeatedly led Wall Street higher, shrugging off inflation fears, higher interest rates and geopolitical shocks.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.