Recap: The main comment that had grabbed the markets attention in the FOMC minutes was that “A number of participants suggested if the economy
continued to make rapid progress toward the Committee's goals, it might
be appropriate at some point in upcoming meetings to begin discussing a
plan for adjusting the pace of asset purchases”. However, while this
hints at the “T” word (taper), this is not entirely new, given that the
comment has come from the small hawkish contingent on the committee and
not the core. Keep in mind, since the minutes, NFP was notably soft,
while higher than expected inflation data had been quickly talked down
by Fed members. As such, in response to the FOMC minutes, the USD saw a
slight bid to reclaim the 90 handle, while US yields picked up, however,
the move has been largely retraced given the fact that the minutes are
somewhat light on substance, providing little in the way of new
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EUR/USD: Following the FOMC minutes the Euro had stood its grounds,
holding onto support at 1.2170-80 to make another test of the 1.22
handle. Given the relatively light economic calendar, focus will be on
the upcoming PMI releases tomorrow, which are expected to highlight an
improvement in the Euro Area and thus underpin the currency. Thus far,
the backdrop remains supportive for EUR/USD to challenge 1.2245-50
again.
