Fed minutes cloud rate hike-pace, but expectations for balance sheet unwind still remain – USD softer

USD is looking south this morning, following through on yesterday’s declines as well. Yesterday the minutes of the July 26th FOMC meeting were released, and these showed that policymakers were somewhat wary of the recent softer inflation. Some of the members seem to prefer better clarity on the trend for inflation before pursuing more rate hikes – this inevitably induced some USD selling.

An announcement of the Fed’s balance sheet unwind in September seems to still be on the cards, but the minutes released yesterday may cast a doubt on the timing of the next rate hike.

In Australia July employment change rose by 27.9k, surprising to the upside and unemployment rate improved ticking lower to 5.6% from 5.7% – the AUD is performing well against the USD and the Euro this morning however gains remain very much in check so far.

Yesterday an initial drop for the EURUSD currency pair to 1.1680 followed by a grind higher to 1.1778 was very close to Realtimeforex TraderTip’s daily scenario for the EURUSD. Today the same tech report sees the possibility of testing 1.1837 after which a sell off down to 1.1706, or 1.1645 in extension.

Later today we have an insight into UK retail sales for July, EZ CPI, US Weekly Jobless and Philly Fed business outlook amongst others.

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