USD/JPY: FOMC minutes as expected, USD/JPY steady despite trade-deal headline downside risks

• FOMC minutes highlights: Most officials viewed rates as well collaborated after Oct cut; Downside risks elevated.
• USD/JPY steady on the release of the minutes and focus is back to trade deal between US and China. 

USD/JPY has been steady on the back of the Federal Open Market Committee minutes which had been expected to signal that policy is on hold for now, barring a material reassessment in the outlook. We had already had a glance at the mood at the Federal Reserve as per Chair Powell’s recent rhetoric. Traders were scrutinising the minutes today for any light that could have been shed on what exactly would qualify as a “material reassessment,” as well as how diversified voters were with respect to the rate cut. Markets were also looking for any updates on the policy review.

Highlights of the minutes

• Most judged level now appropriate barring a 'material' reassessment of the outlook.
• 'A couple' said Fed should reinforce statement with communications that another rate cut unlikely without signs of a 'significant slowdown'.
• Many said rate cut warranted due to global weakness and trade uncertainty.
• Some favored keeping rates steady and argued outlook was favorable and inflation expected to rise.
• A couple supported rate cut but said it was a close call.
• Several concerned some banks had reduced capital buffers when the should be rising.
• Discussed that risks to the economic outlook remained tilted to the downside.

Markets are on red alert

Elsewhere, markets are on red alert and will remain sensitive to trade headlines. Most recently, in light of the latest trade deal headlines, risk sentiment has been soured by news that a Phase One US-china trade deal may not be completed this year, a headline courtesy of Reuters.

Phase One' US-China trade deal may not be completed this year – Reuters 

Indeed, with what appears to be a less dovish backdrop from central banks on the whole, such geopolitical themes associated trade and also the bill on Hong Kong human rights whereby the US Senate on Tuesday unanimously passed the "Hong Kong Human Rights and Democracy Act", overtly taken sides with HK rioters, risk sentiment is on thin ice – that's bullish for the Yen. 

USD/JPY levels:

More to come...