Dollar Index Edges Higher Ahead of Fed Minutes
The US dollar index ticked to the upside on Wednesday as the US was taking a break from markets, celebrating Independence Day. Early, it’s back to punching the clock and pulling up the dollar charts for pattern-seeking.
The central bank will publish what Fed officials discussed during their last meeting three weeks ago. Investors will be looking for clues into the Fed’s rate-hike timeline and whether a possible rate cut is in the 2023 playbook.
US markets reopen today and FX volatility should pick up again, ING Economics FX strategist Francesco Pesole said in a note.
“The minutes from the June FOMC meeting will be in focus but we doubt markets will find much evidence to turn any less hawkish on Fed tightening, which will leave data releases the task of driving any substantial dollar move for now”.
The minutes from the June FOMC meeting are the main highlight today. First, the minutes will shed some light on the compromise between keeping rates on hold but strongly signaling more hikes ahead.
From a market perspective, it will be key to gauge where most of the committee sees core inflation dynamics going and the scope for further tightening. Markets will also be sensitive to any details about members’ positions on rate cuts.
“We heard some strong pushback by Fed Chair Jerome Powell in the post-meeting press conference against cuts in 2024, but the dot plot projections show easing starting sometime next year”, Pesole said.
Overall, the dot plot projections and the post-meeting Fed communication suggest that markets may not find many hints to recalibrate their tightening expectations lower today.
If anything, the trigger for such a dynamic would be weak US data. Today, the calendar is not particularly heavy in the US: factory orders for May and the final print of durable goods orders.
Friday is Jobs Day – nonfarm payrolls will be released for June. Market analysts predict that 225,000 Americans found jobs last month. The expected number is significantly below May’s scorching jobs figure of 339,000 hires.
In that context, the dollar index is flat today, hovering near 103.00. #Dollar Index Edges Higher Ahead of Fed Minutes Nigerian Treasury Bills Yield Rises to 7%
