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Fed minutes offer little fresh policy insight - BTMU

FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that the US dollar has derived some modest support from the release overnight of the latest FOMC minutes overnight which offered little fresh insight into the outlook for Fed policy.

Key Quotes

“The minutes largely echoed the message in the accompanying policy statement that the Fed is gradually shifting towards tightening monetary policy. Similar to in the statement, heightened investor concerns over weaker global growth and a stronger US dollar were downplayed.”

“There was also a wide range of views expressed over the Fed’s decision to maintain their low rates commitment for a “considerable period” after QE ends. The “considerable period” wording was left unchanged but made more conditional on incoming economic data.”

“There was no strong signal as to whether it will be altered again in December. The minutes also revealed that “a number of participants thought that it could soon be helpful to clarify” the likely pace of interest rate increases after the start of policy normalization. Overall, the ongoing shift to tighter Fed policy remains supportive for the US dollar.”

“The focus will now shift today to the release of the latest US CPI report for October which is expected to reveal that headline inflation eased further on the back of lower energy prices. The US dollar is likely to remain sensitive to downside inflation surprises which could offer the Fed scope to delay raising rates for longer.”

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