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USD more solid after FOMC minutes - BTMU

FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ, observes a continuation of the USD upside momentum after yesterday's minutes.

Key Quotes

"FOMC minutes prove more hawkish than expected The US dollar has continued to strengthen in the Asian trading session with USD/JPY rising towards the 104.00-level for the first time since early April. The US dollar’s upward momentum accelerated overnight after the release of the more hawkish than expected FOMC minutes. The minutes revealed that “many” FOMC participants agreed that if the unemployment rate continued to fall more quickly than expected and inflation continues to rise then “it might become appropriate to begin removing monetary policy accommodation sooner than they currently anticipate”, which is currently expected from around the middle of next year."

"Participants “generally agreed” that the recent improvement in labour market conditions and cumulative progress over the last year has been greater than expected, and that labour market conditions had moved “noticeably closer” to those viewed as normal in the longer run. It prompted “many” FOMC members to note that their characterization that there remains “significant” underutilisation of labour market resources “might have to change before long, particularly if progress in the labour market continued to be faster than anticipated."

"However, “many” FOMC participants continued to see a larger gap between current labour market conditions and those consistent with their assessments of normal levels of labour utilization than indicated by the difference between the unemployment rate and estimates of its longer-run normal level. In summary, the minutes provide further evidence that the Fed is gradually moving towards tightening monetary with QE set to end in October and the first rate hike currently expected from around the middle of next year."

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