What Matters In Today’s FOMC Minutes

Oct 12, 5:19 pm
FOMC_Yellen

The US Dollar recovered all of last week's losses, rising all the way up above 97.50. This occurred on the back of hopes for a rate hike by the Federal Reserve in December. Lack of fundamentals and thin liquidity have also helped the upside rally. Yet, we should take nothing for granted because a lot of economic figures will be released before December’s meeting. The long awaited US elections will also take place in November and have a notable impact on the US Dollar. So what matters the most in today’s statement? What should we look for and how will the markets react? All these questions will be answered in this article.

Definition

FOMC Meeting Minutes: scheduled 8 times per year, 3 weeks after the Federal Funds Rate is announced. It is a detailed record of the FOMC's most recent meeting, providing in-depth insights of the economic and financial conditions that influenced their vote on interest rates.

Why Is This Important?

This statement reflects the FOMC members' views on the economy and their estimates for the future of interest rates. Today’s statement might give the market stronger clues on whether FOMC members are on the same page on raising rates in December or not.

Market Reaction

Such meeting minutes are expected to have a remarkable impact on the markets. Whether the members have the same view regarding a rate hike in December or not, we will still see notable market movement today. However, the biggest impact would occur if the members have conflicting opinions. The market would consider this disappointment, which is likely to increase the level of uncertainty towards December. In return, volatility will be on the rise, causing USD to lose some of its gains. Safe haven assets and equities may therefore recover.

USD Technical Outlook

The US Dollar Index finally broke above this year's down trend line yesterday and closed the day well above that level. In addition, the index closed above the previous top in July which stands at around 97.50. Such a break with a daily close above that resistance would increase the estimates for another push higher in the coming trading sessions. Meanwhile, the Fed’s statement today is considered key. It can either confirm the current break and support the upside rally or hint that the recent break was a false/fake breakout, possibly resulting in a reversal of USD gains.

Levels To Watch

SymbolS3S2S1PivotR1R2R3
USD Index96.8897.1097.3397.5097.7798.0598.35
EURUSD1.09331.09911.10241.10821.11151.11731.1206
GBPUSD1.17221.19041.20131.21951.23041.24861.2595
USDJPY102.14102.64103.08103.58104.02104.52104.96
USDCHF0.97450.97790.98330.98670.99210.99551.0009
USDCAD1.30721.31151.31881.32311.33041.3347

1.3420

 
Nour Eldeen Al-Hammoury

Nour Eldeen Al-Hammoury has more than ten years of experience in focusing on foreign exchange and global economic developments, as well as central bank policies and intermarket analysis (global markets relationships). Nour Eldeen is a regular on many major TV networks (several times each) such as: BBC Radio, BBC World News, Al-Jazeera, Al-Hurra TV CNBC Europe, CNBC Asia, CNBC Arabia, Al Arabiya, Bloomberg, Russia Today, Dubai TV, Sama Dubai, Skynews Arabia, Qatar TV and Future TV News.