BTMU FX Strategy Research notes that the more dovish tone of the FOMC minutes will reinforce the market’s view that the Fed is likely to delay raising rates again until next year and thereby continue to weigh on the US dollar in the near-term.
"Of secondary importance, the FOMC minutes also supported the market’s current expectations that it will announce plans to begin balance sheet shrinkage at their September FOMC meeting.
We do not expect the announcement to have material impact on the US dollar given the initial pace of roll offs will be only very gradual," BTMU argues.
Same true, according to BTMU, to ECB President Draghi’s upcoming speech at Jackson Hole especially after yesterday’s report from Reuters that he will not deliver a fresh policy message at Jackson Hole, and wants to hold off on debate until the autumn when the ECB is expected to outline plans to begin tapering QE from next year.
"Overall, we see the report as neutral for the euro although it tips the balance of risks a little more onto the dovish side ahead of the speech. President Draghi will reportedly focus his speech on fostering a dynamic global economy which could offer some scope to send a cautious signal that central banks like the ECB need to be very careful when reversing current loose policy," BTMU adds.
Source: BTMU ResearchOriginal Article
