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The minutes of the Fed's October meeting on monetary policy, which was published on Wednesday, didn't bring anything new regarding the regulator's interest rate plans, in fact confirming the previously taken course to pause lowering interest rates.
The minutes showed that not all members of the Fed Open Market Committee (FOMC) supported the decision to lower interest rates by 0.25%, but at the same time, everyone expressed confidence that after reducing rates in the future, they should be paused. The meeting also discussed the possibility of creating a permanent repo mechanism following recent unrest in short-term money markets. In fact, the bank discussed the topic of regular liquidity replenishment of the financial system, which indicates the prospect of a soft monetary rate even if the process of lowering interest rates stops.
In general, the leaders of Federal banks described the economic situation in the country as favorable not only at the present moment, but also in the future. Indeed, among the economically developed countries in the States, there is a higher economic growth.
Against the background of the expectation of the publication of the minutes, as well as its release, the American dollar received support on Wednesday against a basket of major currencies, however its strength is restrained by a decline in the yields of Treasury as well as the decline in investor's interest in risky assets in the wake of new fears that the US-Chinese talks trade may come to a deadend. As pointed out earlier, it is the trade war and the difficulties of the negotiation process that are the main problems for the global economy and the general demand for risky assets.
Today, the attention of the market will be drawn to the publication of the minutes of the last meeting of the ECB on monetary policy. We believe that if he confidently confirms the Bank's course on an ultra-soft monetary policy, this will put pressure on the euro, but it will not be strong, as markets are eagerly awaiting tomorrow's speech by the head of the ECB, President C. Lagarde. Moreover, investors hope that she will break her silence regarding the monetary rate of the regulator and present her view on the prospects of monetary policy. We are sure that her speech will be important no matter what, as she will either support the course towards an ultra-soft monetary policy taken earlier by her predecessor M. Draghi, or she will refute it. In any case, we can expect a noticeable movement of the euro in the currency markets.
Forecast of the day:
EUR/USD is trading in a narrow range of 1.1055-1.1085 waiting for the publication of the minutes of the ECB meeting on monetary policy and the speech of C. Lagarde on Friday at an economic conference in Frankfurt am Main. Thus, we look forward to maintaining this range until her speech.
Spot gold is consolidating below the key level of 1478.55. We expect it to continue to decline after breaking through the support line with the local target of 1448.15.
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