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

The US FOMC minutes, of the October 31/November 1 meeting, will be released on Wednesday at 19:00 GMT. At that meeting, the FOMC, voted unanimously to keep the Federal Funds rate between 1.00% and 1.25% and to continue with the normalization of the balance that started in October.

Key notes

Like it did in September, the Fed kept rates unchanged in November as expected. It was a meeting with no press conference so the minutes could offer some new clues about the future path of monetary policy. Market consensus expects almost unanimously a rate hike in December. After the November meeting, President Trump announced that Jerome Powell as his nominee to replace Janet Yellen as Fed’s Chair. She will step down from the bank's Board of Governors when she is replaced, she announced Monday. 

“Markets will parse the Fed minutes for any signal about the path of rates beyond year-end but with a December rate hike over 95% priced, it is unlikely that the minutes add anything new to the debate”, signaled analysts at TDS, in line with most expectations. The last FOMC meeting revealed no new information pointed out analysts at Danske Bank and they do not expect much news from the minutes either.

"They may however shed additional light on the individual views of members regarding the persistent issue of low inflation despite the economy being at or near full-employment”, said analysts from Kiwibank, looking into what extra information could bring the minutes. 

FOMC Minutes to take center stage today – BMO CM

Implications for DXY

The US dollar is headed toward the release of the minutes having the worst performance in a week and with a clear negative momentum. The greenback is falling across the board, as US yields point lower and amid a slide in equity prices in Wall Street. 

If the minutes add no new information like most market analysts predict, it could be a non-event. That could favor a continuation of the US dollar slide that could accelerate if DXY breaks below November lows. If the minutes show a “hawkish surprise”, the greenback could reverse its course and recover ground. However, with expectations about a December rate hike so high, a “dovish surprise” is likely to have a more significant impact, with a big potential to affect the USD. 

The US Dollar Index is about to test November lows that are located at 93.25 (today’s low was reached at 93.30). A break lower could open the doors to more losses, with a potential target at 93.05. Below that level, the next strong support is the 92.75/80 area. If the DXY manages to hold on top of 93.30 it could gain support and rise to test again the 94.00. Before that level, intermediate resistance could be seen at 93.60 and 93.85.  

US Dollar tumbles to session lows ahead of FOMC

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.