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If y’all can still recall, the November 8 FOMC statement gave the Greenback a bullish boost since the Fed gave a positive assessment of the U.S. economy and judged that risks to the outlook “appear roughly balanced,” which is why the Fed “expects that further gradual increases in the target range for the federal funds rate” is the way to go.

And tomorrow at 7:00 pm GMT, the Fed will release the minutes for its November monetary policy meeting, which will give us a more in-depth look at the Fed’s thinking.

And here are the two key things y’all need to watch out for.

1. Forward guidance on a December hike

The Fed’s dot plot during the September FOMC statement revealed that the Fed is open to one more hike this year and that 12 of the 16 FOMC members are open to the idea of at least one more hike.

And since the Fed didn’t hike in November, and since December is the last month of the year, the market is therefore keen to know if the Fed is still on track for a December rate hike.

And the most explicit forward guidance would be if the minutes state something like this:

“Many/Most/All participants thought that another increase in the target range for the federal funds rate was likely to be warranted in the near term if incoming information left the medium-term outlook broadly unchanged.”

If such an explicit forward guidance is absent, then market players will likely look to the Fed’s assessment of the U.S. economy.

If the Fed’s assessment is generally positive, then the Fed is likely still on track for a December rate hike.

However, do note that the Fed already gave a positive assessment of the U.S. economy during the November FOMC statement, so a bullish USD reaction will likely be short-lived.

But on the flip side, if the minutes reveal that the Fed has some concerns, then the Greenback will likely encounter sellers.

2. Clues on future rate hikes

Aside from clues on a December rate hike, market players will likely be sniffing for clues with regard to rate hike prospects for next year and beyond.

The minutes usually don’t give any explicit clues, but we can read between the lines by reading up on the Fed’s outlook for the U.S. economy.

And remember, the November FOMC statement only noted that “Risks to the economic outlook appear roughly balanced” without really elaborating, so there’s room for surprises.

If the Fed presents a generally upbeat outlook, then that will likely be seen as hawkish. But if the Fed expresses some doubts or acknowledges that some downside risks may be growing, then that will very likely be interpreted as dovish and Greenback negative.

And just so you know, some Fed officials have already expressed some growth-related concerns recently.

Dallas Fed President Robert Kaplan, for example, warned during a Nov. 16 interview that (emphasis mine):

“Growth in the United States this year is going to be close to 3 percent. What I’m conscious of is part of the bump this year is all due to the fiscal stimulus. The government spending that we talked about. Not the corporate tax reform so much, as the individual tax cut financed by increasing debt to GDP. That’s going to start to wane into ’19 and ’20.”

Fed Vice Chair Richard Clarida focused on something else (external risks from trade) during a separate Nov. 16 interview, but he did present the same dovish view on growth when he said that (emphasis mine):

[T]here is some evidence of global slowing. I think it’s early days. You know, the IMF has marked down its global outlook a bit. But certainly, at least speaking for myself, that’s something that is going to be relevant as I think about the outlook for the U.S. economy. You know, because it impacts big parts of the economy through trade and through capital markets and the like.”

St. Louis Fed President James Bullard also warned about future growth prospects when he spoke yesterday.

“Whether there are cracks in the U.S. economy’s performance is one of the main challenges for the Fed going forward.”

“I don’t have any reason to doubt the economy will slow in 2019 and 2020. It would be much tougher for the Fed to continue to raise at this pace in a slowing economy relative to where we have been.”

There are also rumors flying about that the Fed may slow down its hiking pace, and there’s a chance that the minutes may shed some light on that (or give outright confirmation).

But on the flip side, there’s a chance that the minutes may reveal a more hawkish message.

After all, the September FOMC minutes revealed that (emphasis mine):

A few participants expected that policy would need to become modestly restrictive for a time and a number judged that it would be necessary to temporarily raise the federal funds rate above their assessments of its longer-run level in order to reduce the risk of a sustained overshooting of the Committee’s 2 percent inflation objective or the risk posed by significant financial imbalances.”

A couple of participants indicated that they would not favor adopting a restrictive policy stance in the absence of clear signs of an overheating economy and rising inflation.”

If more Fed officials stress that the Fed’s policy needs to be more restrictive, then that will be a hawkish signal and open the way for potentially more rate hikes.

But if the minutes reveal that more Fed officials began saying that they would not favor adopting a restrictive policy stance, then that would be dovish.