SELL DXY/ USD: NEUTRAL FOMC JULY MINUTES & FED BULLARD SPEECH
FOMC minutes were neutral-dovish on the margin as expected, with members split on calls for further rate hikes - though there was a general consensus that the Fed needed to acumulate more data before moving on rates (this could be dovish given in real time data has been poor). Several wanted more confidence on inflation, since this is the casewe know inflation took a relagively big hit this past tuesday so also could be considered dovish. Though some saw a rate hike "soon" appropriate though reasons for why are scarce short of labour markets tightening.
This in general imo was dovish/ neutral as expected with hawks only having labour markets on their side - I like AUDUSD and kiwi longs here (aussie prefered) as I have said all week, despite the pull-back. Given FOMC minutes were not hawkish I think AUD and NZD can move higher now as i believe it was the FOMC risk that cause the sell-off or was responsible for most - I also like short $yen as a continued theme on pullbacks and short GBPUSD as a long USD hedge from 1.305.
FOMC July Minutes Highlights:
FOMC Minutes: Split Fed in July Sought to Keep Options Open On Rate Hike
FOMC Minutes: Uncertainty From Brexit, May Hiring Slowdown Receded
FOMC Minutes: General Agreement to Accumulate More Data Before Rate Move
FOMC Minutes: Some Saw Another Rate Hike Appropriate Soon
FOMC Minutes: Several Wanted to Wait For More Confidence On Inflation
FOMC Minutes: Most Saw U.S. At or Approaching Full Employment
FOMC Minutes: Uncertainty From Brexit, May Hiring Slowdown Receded
FOMC Minutes: Several Saw Wage Increases as Evidence of Tightening Labor Markets
FOMC Minutes: Others Uncertain About Trajectory of Inflation
FOMC Minutes: General Agreement to Accumulate More Data Before Rate Move
FOMC Minutes: European Banks Under Pressure, Paticularly Italian Banks
FOMC Minutes: Staff Saw U.S. Financial System Resilient to Brexit Vote
FOMC Minutes: Long-Term Policy Framework Discussed, Decisions Not Needed For Some Time
Fed Bullard Speech highlights:
Bullard Reiterates Fed Rate Target Close to Appropriate Level
Bullard: Fed Rate Target Close to Appropriate Level
Fed's Bullard: Fed Needs to Explain Why Predicted Rate Rises Haven't Happened
Bullard Sees Limited Policy Coordination Between Central Banks
Bullard: Would Like to See Higher Rate of Productivity
Bullard: Sticks with call for single rate hike in 2016 & 2017, reiterates data dependency
This in general imo was dovish/ neutral as expected with hawks only having labour markets on their side - I like AUDUSD and kiwi longs here (aussie prefered) as I have said all week, despite the pull-back. Given FOMC minutes were not hawkish I think AUD and NZD can move higher now as i believe it was the FOMC risk that cause the sell-off or was responsible for most - I also like short $yen as a continued theme on pullbacks and short GBPUSD as a long USD hedge from 1.305.
FOMC July Minutes Highlights:
FOMC Minutes: Split Fed in July Sought to Keep Options Open On Rate Hike
FOMC Minutes: Uncertainty From Brexit, May Hiring Slowdown Receded
FOMC Minutes: General Agreement to Accumulate More Data Before Rate Move
FOMC Minutes: Some Saw Another Rate Hike Appropriate Soon
FOMC Minutes: Several Wanted to Wait For More Confidence On Inflation
FOMC Minutes: Most Saw U.S. At or Approaching Full Employment
FOMC Minutes: Uncertainty From Brexit, May Hiring Slowdown Receded
FOMC Minutes: Several Saw Wage Increases as Evidence of Tightening Labor Markets
FOMC Minutes: Others Uncertain About Trajectory of Inflation
FOMC Minutes: General Agreement to Accumulate More Data Before Rate Move
FOMC Minutes: European Banks Under Pressure, Paticularly Italian Banks
FOMC Minutes: Staff Saw U.S. Financial System Resilient to Brexit Vote
FOMC Minutes: Long-Term Policy Framework Discussed, Decisions Not Needed For Some Time
Fed Bullard Speech highlights:
Bullard Reiterates Fed Rate Target Close to Appropriate Level
Bullard: Fed Rate Target Close to Appropriate Level
Fed's Bullard: Fed Needs to Explain Why Predicted Rate Rises Haven't Happened
Bullard Sees Limited Policy Coordination Between Central Banks
Bullard: Would Like to See Higher Rate of Productivity
Bullard: Sticks with call for single rate hike in 2016 & 2017, reiterates data dependency
1. USD Option Implied Feds Funds Futures have sold off post FOMC minutes and are now implying a 12% chance of a Sept hike vs 18% yesterday and Dec 41.6% vs 45.1% yesterday.