- Markets unmoved by FOMC minutes
- USD and CAD remain strongest currencies for the week
By Killian Greenwood
Markets were unmoved by the highly anticipated FOMC minutes released overnight. The US Dollar and Canadian Dollar remain the strongest major currencies for the week, but both are losing momentum.
The FOMC minutes for the June meeting revealed that members were divided over the timing of balance sheet reduction while there was also discussion over recent inflation weakness. At the meeting, the Fed raised its policy rate, by 25 basis points, to a target range of 1-1.25%.
The minutes reflected the division among members regarding the timing of balance sheet reduction as well as how it would affect the path of interest rate hikes. While "several preferred to announce a start to the process within a couple of months", "some others emphasised that deferring the decision until later in the year would permit additional time to assess the outlook for economic activity and inflation".
Overnight in Australia it was reported that the trade surplus widened to AUD 2.47b in May, up from AUD 0.09b beating expectation of AUD 1.11b. The Australian dollar remains the weakest major currency for this week as markets were dissatisfied that the Reserve Bank of Australia didn't turn hawkish, following other major central banks.
The focus this morning will be the release of the account of the ECB’s June meeting as well as speeches from ECB Council members. June's meeting has been superseded by comments from ECB members, particularly after Draghi’s speech last week which were more hawkish than the market had anticipated.
This afternoon we await service sector data from the US although the FX market may well continue to be range bound at least until the all important Non-farm payroll release tomorrow.