Dovish FOMC Minutes Weigh on USD Trading

Dovish FOMC Minutes Weigh on USD Trading

USD trading got hit by a wave of selling in recent sessions, as the FOMC minutes turned out to be dovish. Policymakers weren’t too keen about hiking interest rates early next year as they reiterated that rates will remain low for a “considerable time” after easing ends. They also noted that the dollar strength is starting to weigh on external demand and may spark disinflation. Only the initial jobless claims report is up for release today and this might not have much of an impact on dollar trading if profit-taking continues.

The euro was able to recover against USD trading although it continued to weaken against some of its major counterparts. There were no reports released from the euro zone yesterday while today has only medium-tier data on tap. These are the German and French trade balance, which are both expected to weaken from their previous month’s readings.

USD Trading Levels

The pound took advantage of USD trading weakness recently as GBPUSD rallied strongly after the FOMC minutes were released. Halifax HPI in the UK was stronger than expected at 0.6% versus the projected 0.2% gain. For today, the BOE statement could drive pound price action, although no actual changes are expected. Any hawkish remarks could push the pound for more gains.

The franc continued to rally against USD trading but gave up some ground to the euro. There have been no major reports out of Switzerland yesterday, apart from the jobless rate which held steady at 3.2%. For today, there are no reports due from Switzerland and franc pairs might be sensitive to risk sentiment.

The yen showed signs of weakness to most of its counterparts but outpaced USD trading after the FOMC minutes were released. Japanese trade balance and Economy Watchers sentiment both came in weaker than expected, highlighting the odds of further easing from the BOJ. Earlier today, core machinery orders showed a strong 4.7% pickup. Preliminary machine tool orders data is up for release next.

The comdolls advanced to the dollar and took advantage of the pickup in risk sentiment, as the Fed pledged to keep monetary policy easy for the time being. Canadian housing starts came in line with expectations at 197K while Australia’s jobs data printed weaker than expected results. Employment change fell by 29.7K while the previous reading was downgraded, keeping the jobless rate at 6.1%. There are no major reports due from the comdoll economies for the rest of the day.

To contact the reporter of the story: James Brennan at

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.