- The Minutes of the Aug 1 FOMC meeting said that many participants saw another hike likely 'soon'
- USD/JPY has dropped a handful of pips on the Fed minutes, trading at 110.44 at the time of writing immediately after the minutes were released, down from 110.52 on the five-minute sticks.
- S&P is adding gains while US yields are steady.
- The dollar is slightly lower across the board.
USD/JPY has lost about 10 pips on the back of the Minutes of the Aug 1 FOMC meeting's minutes. The key takeaway from the minutes is that the FOMC generally expected further gradual hikes, although they see that trade, housing and emerging markets as downside risks. The FOMC also expected GDP growth would slow in second half of the year but remain above potential.
Further key notes:
- Officials note rates moving closer to estimates of neutral.
- Further gradual hikes to help keep econ.
- Some see fiscal as upside risk, few see as the future downside.
- Trade poses important source of uncertainty.
- Discussed implication of yield-curve flattening.
- The weighed timing of when to stop calling rates accommodative.
- Many officials see inflation stable near 2% m-term.
- Officials discussed bank counter-cyclical capital buffers.
Eyes on US politics, geopolitics and Jackson Hole
There has been a muted reaction to these minutes and instead, markets are now looking towards risk associated to yesterday’s guilty plea from Trump’s former attorney, Michael Cohen, on Federal charges. That initially sparked ‘mild’ demand for safe-haven assets. The implications are risk sensitive and there is going to be more to follow as this all pans out, for Trump's legal woes could well sap up more attention from markets in time to come. At the end of the week, we also have the Jackson Hole and markets will be looking to Powell's speech on Friday as the main highlight - It will be watching for hints of changes to the future monetary policy framework - analysts at ANZ argue that Powell will hold steady on rate guidance.
USD/JPY levels
The Cloud cover and converging 21- & 55-DMAs by 111 the figure has been a hard area of resistance. On a wide breakthrough there, the August 1st high at 112.15. The 113 handle is the main objective for the bulls but on a break below the 200 day moving average at 109.83, risk will be open to 108.10 but there will not be any great shakes before Powell.
"We suspect that rallies will remain capped by 110.80/111.00. While the 109.85 200 day ma underpins, we look for a retest of the current August high at 112.15 above which sit the July peak and 200 week moving average at 113.18/35," analysts at Commerzbank argued.
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 steady below 1.0800 after US PCE meets expectations
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair barely reacted to US PCE inflation data, with the Greenback shedding some pips. Fed Chair Jerome Powell set to speak ahead of the weekly close.
GBP/USD hovers around 1.2620 in dull trading
GBP/USD trades sideways above 1.2600 amid a widespread holiday restraining action across financial markets. Investors took a long weekend ahead of critical United States employment data next week. Fed Chair Powell coming up next.
Gold price sits at all-time highs above $2,230
Gold price holds near a fresh all-time high at $2,236 in thinned trading amid the Easter Holiday. Most major world markets remain closed, although the United States published core PCE inflation, the Federal Reserve’s favorite inflation gauge.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.