When are the FOMC minutes and how could they affect DXY?

The US FOMC minutes of the March 19/20 meeting, will be released today at 18:00 GMT. At that meeting, the Committee voted to keep the rates steady between 2.25% and 2.50%.

Key notes

The Fed acted as expected at the March meeting. The central bank presented updated projections showing that eleven of 17 staff members didn’t think an increase would be needed in 2019, two more compared to the previous meeting. It offered details about its balance sheet normalization program announcing it would halt the runoff of Treasury holdings at the end of September.

The meeting was seen as more dovish than market expectations and pushed the US Dollar to the downside. Chairman Powell during his press conference also pointed to a pause in raising rates. He said it may be “some time before the outlook for jobs and inflation calls clearly for a change in policy."

According to Joseph Trevisani, senior Analyst at FXStreet, the wording in the January and March FOMC statements around idea of rate patience and its conditions was identical. “Powell has been at pains in his press conferences after the last two FOMC meetings to stress the health of the US economy. But despite its quoted strength Fed rate policy has undergone a drastic shift in the last half year.” He points out that the origins and opinions of the board members around this change and the potential for a further reduction in US economic prospects and perhaps a rate cut before the end of the year will be the main interest in the minutes.

Implications for DXY

The US dollar, measured by the DXY (Dollar Index)  bottomed the day of the meeting at 95.75, the lowest level in more than a month. But the day after, reversed its course and kept rising until last week when it peaked at 97.52. Today the DXY is hovering slightly below 97.00, falling for the third-day in-a-row. 

If the minutes contain new information markets could react. Analysts will see what kind of discussions took place and how big were the concerns of the FOMC staff. If the minutes are titled to an even more dovish position, signaling, for example, more concerns about the US outlook and mention the possibility of a rate cut, the US Dollar could suffer. In the opposite direction, if those extreme positions are not found and members point to a not so negative outlook, the greenback could benefit. 

The DXY is losing strength, but a recovery back above 97.00 would be positive. The key resistance continues to be 97.50/70: a daily close on top could clear the way to more gains over the medium term. On the downside, it the minutes help the DXY consolidate under 97.00, an extension of the decline seems likely over the short-term. The next essential support stands at 96.60 followed by 96.10/20.

 About the FOMC minutes

FOMC stands for The Federal Open Market Committee that organizes eight 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.