FOMC minutes, what to expect, USD & Gold - 50s

The PMI data today has given the US Dollar bears a head start before the FOMC minutes are released. Firstly, the recent cooler-than-expected US Consumer Price data has already created sentiment for a Fed pivot and investors' hopes that the central bank may be in a position to moderate its pace of hikes. In the prior statement, it read "In determining the pace of future increases in the target range, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments."

This statement gave rise to volatility in markets as investors positioned for a softer approach from the Fed which Chair Jerome Powell pushed back against in his presser by suggesting that there will likely be a higher terminal rate. Therefore, the minutes will be scrutinised for clarity in this regard. ''We expect the November FOMC meeting minutes to shed further light on the FOMC's deliberations regarding the expected downshift in the pace of rate increases in upcoming meetings,'' analysts at TD Securities said. 

''But above all, we look for the minutes to place a lot of emphasis on the likelihood that the terminal rate will need to end up higher than anticipated initially. The Fed still needs to grind down the labour market to align wage and household spending growth with rates more consistent with the inflation target.''

In such a scenario, this could put a bid into the US Dollar that has been downtrodden ahead of the event. However, the upside is compelling in Gold as explained in the video.