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22/05/24
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EUR Inches Down Before FOMC Minutes
On Wednesday, the euro was slightly lower, and EUR/USD traded at about 1.0836, down 0.17% in the North American session.
The data calendar in the US has been light with no tier-1 events until Thursday. This means the focus is on Fedspeak, with several FOMC members delivering speeches. The minutes of the latest Federal Reserve meeting will be released later in the day, and markets will be looking for clues about future rate policy.
The Fed has kept its benchmark rate at between 5.25% and 5.50% since July 2023 and has not been able to cut lower rates due to inflation data for the first quarter, which has been hotter than expected and has actually moved up. This has complicated the Fed’s fight to push inflation lower to the target of 2%.
Fed members have in recent weeks delivered essentially the same message – rates have to stay in restrictive territory until there was evidence that inflation will stay at low levels sustainably and caution is the way to achieve this.
According to CME’s FedWatch tool, markets are pricing in a Sept. cut at 63%.
If the minutes reiterate the hawkish FOMC member stance it would confirm that the Fed is not in a hurry to cut rates and that may boost the US dollar.
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