Market News & Analysis
USD decline continues after FED minutes
The USD took a fresh beatdown overnight sending risk markets higher and turning around what looked like weak sessions. The FED minutes set the tone for a new round of heavy USD selling after last Friday the FED sent the USD sharply lower after comments hinted at a pause in rate raises. Last nights minutes confirmed this, Gold and Risk majors all jumped to the USD the EUR had a solid night adding just over 100 pips.
Minutes from the Fed’s Dec.18-19 meeting revealed that several policymakers were in favour of the US central bank keeping rates steady this year. Some of the key points out of the FED minutes.
“Though financial conditions had tightened and Federal Open Market Committee global growth had moderated, members generally anticipated that growth would remain above trend and the labour market would remain strong.”
“Several participants expressed the view that it might be appropriate over upcoming meetings to remove forward guidance entirely and replace it with language emphasizing the data-dependent nature of policy decisions.” –
“The tightening in financial conditions so far did not appear to be restraining real activity, although a more persistent tightening would undoubtedly weigh on business and household spending.”
“Risks to the outlook appeared roughly balanced, although some noted that downside risks may have increased of late.”
The USD index fell sharply and is now trading close to 95 even after a reaching a high of 97.71 on December 14th last year. 94.95 is the next low for sellers to test. The USD index has been under pressure since its Dec 14 high but selling has accelerated since the 3rd of January after the Fed first hinted at a change in policy.
The USD has also been savaged to the CAD. The CAD has been lifted by higher oil prices of late while the USD has been hit hard by policy change. The USDCAD has lost 413 pips in 6 trading sessions! As we see constantly in the market’s sentiment can change very quickly!
Sources: CNBC – Daily FX – Netdania
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