Last night saw the release of the much anticipated FOMC Meeting Minutes, which is released after every FOMC meeting and gives a summary of the members views and concerns regarding the US economy and the potential measures that were contemplated. Given that it is the FOMC members who vote on which monetary policy tools to utilize to prop up the economy and their recent hawkishness in which they stand by at least 3 rate hike this year, traders were hoping that the minutes would reveal when the rate hikes would begin. The anticipation of a March rate hike was priced in with high probability going into the minutes but the bullish optimism has since sagged as we see the USD finding resistance with buying pressure weaning and bears resurfacing as the probability of a later rate hike is priced in.
Also of note from the minutes was the multiple mentions of the USD being too strong and potentially making it difficult to lift rate just yet, which would also have USD bulls nervous and eager to take some profits on their longs as bears begin scaling in. As always but especially going into next month key FOMC meeting and outcome, markets will remain sensitive to economic data out of the USA, as they look for clues as to whether, the data depended, FED will raise rates in March or not, with a better than expected release likely to see the USD propped up while a worse than expected release will see the USD sag further as the probability of a rate hike falls.
Today’s key event out of the USA is the release of the Unemployment Claims figure. The figure represents the number of individuals who filed for unemployment insurance for the first time during the past week and is regarded as an important signal as to the health of the economy. A lower than expected number implies that less people filed for unemployment and that the US economy is stabilizing, which would see the USD strengthen while a worse than expected number, in which more people than expected filed for unemployment would result in the USD weakening as traders price in a weaker economy.