What Are the FOMC Minutes?

The latest set of FOMC minutes are due later today and as always, traders are bracing for potential market moving details. The minutes essentially lay out the finer details of the discussions which took place at the last FOMC meeting. As such, the minutes can often be helpful in adding clarity for traders and revealing dovish or hawkish signals to help traders align their positions in the markets.

What Happened at The Meeting?

The Fed held rates unchanged at the March meeting while sticking to its view that three rate cuts will likely be appropriate this year. Powell noted that the bank had made substantial progress on bringing inflation down to target, and remained committed to doing so, while the labour market had also remained very strong. The bank noted that it would retain a data-dependent approach to policy decisions and left the timing for a first rate cut open.

What to Watch in the Minutes?

Typically, traders are looking for dovish or hawkish signals. Dovish, meaning anything signalling rate-cuts or holding rates steady and hawkish meaning anything signalling rate-hikes or removal of support. In today’s minutes, the focus will be on timing signals.

Traders will be looking to see whether there is any sense of when the Fed is likely to hike. If members are seen discussing a particular month, such as June, as a likely easing date, this should be bearish for USD. However, if members refrain from any specific timing signals or show high uncertainty around timing, this will likely be bullish for USD near-term.

Additional Notes

Ahead of today’s minutes we have the latest US inflation data due. This is a high priority release and has elevated volatility risk. As such, today’s release might impact the relevance of the minutes. For example, if inflation is seen dropping sharply below forecasts, this will be bearish for USD even if the FOMC minutes don’t have any clear bearish signals.

Technical Views

DXY

The failure at the 104.95 level has seen the market trailing back down to retest the broken bear channel highs, just ahead of support at 103.48. While this area holds, focus is on a continuation higher and a breakout above 104.95. Below here, 102.49 is the next support to note.