When are the FOMC minutes and how could they affect DXY?

The US FOMC minutes, of the March 20/21 meeting, will be released on Wednesday at 18:00 GMT. At that meeting, the Federal Reserve, rose the Federal Funds rate by 25bp to a range of 1.50% to 1.75%,  in a unanimous decision.

Key notes

The move in March was widely expected and market participants focus their attention to the updated projection from the FOMC staff. The central bank signaled two more rate hikes in 2018 and upgraded 2019 and 2020 growth forecasts. Back then, the speculations about four rate hikes during 2018 were gaining momentum. 

The minutes will show the concerns and worries from the staff and probably what would it takes for them to decided an acceleration of the current “gradual and patient” tightening cycle. Chair Powell mentioned after the meeting that they were considering the idea of more press conferences. The minutes could show how close is the Fed make changes on the meeting formats. Also, worth to look at, is how me members are seeing the rise in yields and other interest rates, like Libor. 

“The FOMC minutes are drawing more attention than usual. The March meeting was Powell's first and a rate hike was delivered.  However, ideas that the minutes will reveal much insight into what officials were thinking about the rising trade tensions or the thrust of fiscal policy, which the CBO estimated this week would produce a $1 trln deficit in 2020 (two years earlier than previously expected) may be disappointed”, wrote analysts at BBH.

The minutes will be released after today’s data showed a decline in the CPI in March but the core index continued to point to the upside. Analysts expect an acceleration on the coming months. What the minutes show regarding inflation could have an impact on markets. 

Implications for DXY

Compared to the level it had before the last FOMC meeting, the US Dollar Index is down modestly. Last week reached the highest level in a month above 90.60 and then started to move lower. The DXY awaits the minutes at 2-week lows and under 85.50 with a clear bearish tone. With the Index below a relevant support, if the greenback weakens after the minutes, it could open the doors for a test of 89.00, before that level 89.15 might offer support. 

“The minutes will likely provide more evidence of this upbeat, more hawkish Fed narrative and headlines may ultimately provide another leg of support to the USD”, said analysts at ANZ. If the US Dollar strengthens after the minutes, it could activated a recovery of DXY. To the upside, resistance might be seen at 89.60, 89.80 and 90.15. To the upside, the key level continues to be 90.45/50: a daily close well above could clear the way to more gains. 
 

About the FOMC minutes

FOMC stands for The Federal Open Market Committee that organizes 8 meetings in a year and reviews economic and financial conditions, determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. FOMC Minutes are released by the Board of Governors of the Federal Reserve and are a clear guide to the future US interest rate policy.