10 Jul 2014
USD softer post-FOMC minutes - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, observes the weakness around the USD following yesterday's FOMC minutes.
Key Quotes
"The dollar is a touch weaker versus the euro since the release of the FOMC minutes from the meeting on 17th-18th June and the price action indicates that there were expectations that perhaps the minutes might have revealed more debate over the timing of the first fed funds rate hike. However, there was little focus on this although the minutes did reveal that QE would end with a USD 15bn taper in October rather than dragging on with USD 5bn until December."
"That I suppose does mean that under Chair Yellen’s “around six months” definition of “considerable period” it does mean the potential for a rate increase could come a little sooner in 2015. But the lack of debate on this aspect underlined to the market that we are still potentially a year away from a first possible rate increase and hence there is little appetite for pushing yields higher."
"We are somewhat surprised though that there was little said about evidence of emerging inflation – indeed “several” participants remained worried about low inflation. We expect a very different tone from the minutes of the next FOMC meeting taking place at the end of this month."
Key Quotes
"The dollar is a touch weaker versus the euro since the release of the FOMC minutes from the meeting on 17th-18th June and the price action indicates that there were expectations that perhaps the minutes might have revealed more debate over the timing of the first fed funds rate hike. However, there was little focus on this although the minutes did reveal that QE would end with a USD 15bn taper in October rather than dragging on with USD 5bn until December."
"That I suppose does mean that under Chair Yellen’s “around six months” definition of “considerable period” it does mean the potential for a rate increase could come a little sooner in 2015. But the lack of debate on this aspect underlined to the market that we are still potentially a year away from a first possible rate increase and hence there is little appetite for pushing yields higher."
"We are somewhat surprised though that there was little said about evidence of emerging inflation – indeed “several” participants remained worried about low inflation. We expect a very different tone from the minutes of the next FOMC meeting taking place at the end of this month."