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08.10.202012:38 Forex Analysis & Reviews: Dollar ignores Fed minutes

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Exchange Rates 08.10.2020 analysis

At the beginning of this week, the US dollar traded high in the market, and this is due to Trump's statement of ending negotiations over the coronavirus relief bill. It sparked a spike in Wall Street sales, which made investors prepare for new downside risks.

Later, when Donald Trump asked the Congress for $ 25 billion in bailouts to support Americans who lost their jobs, investors calmed down a bit, and the yield on US Treasuries began to rise again just below 1.59%, where it was at the beginning of the week.

Following this, markets reached a two-week high, and US stock futures returned to positive dynamics a couple of hours before the New York trading platform opened. Stocks in Europe, meanwhile, were mostly stable or declining.

Then, today, the Federal Open Market Committee published the minutes of its September meeting, from which it was indicated that three conditions must be met before the Central Bank raises the base rate from the current 0-0.25% per annum. Firstly, the situation in the US labor market should be similar to the Fed's concept of full employment, secondly, inflation should be at least 2%, and thirdly, clear signals are needed that inflation will remain above 2%.

However, from the forecasts of members, it is clear that some do not expect the economy to meet these targets in the coming years, especially since it is slowly recovering from the steep recession caused by COVID-19.

With regards to the PEPP bond buyback program, most said that they are open to expanding its scale and scope in the future, thus, specific discussions may be made regarding the issue at the upcoming meetings.

Nonetheless, the dollar did not react to such news.

Eseguito da Irina Maksimova
Esperto analista di InstaForex
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