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So much for that hawkish FOMC statement! The minutes of the September meeting revealed that there were still plenty of doubts among policymakers, convincing dollar bulls to retreat.

On the flip side, the euro extended its gains after Spanish PM Rajoy exerted his authority in giving the Catalan government an ultimatum.

  • FOMC minutes: Many Fed officials saw another rate hike this year
  • FOMC minutes: Many Fed officials were concerned that the low inflation is not transitory
  • FOMC minutes: A few wanted to delay next hikes until inflation ticks higher
  • U.S. JOLTS job openings fell from 6.14M to 6.08M vs. 6.13M forecast
  • New Zealand food prices slipped by 0.2% in September

Major Events/Reports

FOMC minutes highlight Fed divide

Remember when the September FOMC statement led dollar bulls to charge on stronger December hike hopes? Well, the transcript of this particular huddle revealed that a handful of policymakers had their doubts about tightening due to the lackluster inflation.

While the minutes indicated that many Fed officials saw another hike this year it also noted that some were also concerned that the drags to inflation might not be transitory after all.

“Nevertheless, many participants expressed concern that the low inflation readings this year might reflect not only transitory factors, but also the influence of developments that could prove more persistent, and it was noted that some patience in removing policy accommodation while assessing trends in inflation was warranted.”

The September FOMC minutes went on to show that a few policymakers suggested that no further increases in interest rates are warranted in the near term.

However, some also argued that the risks to inflation are to the upside due to a tight labor market and rising wages. And while committee members also factored in the likely impact of the hurricanes on growth, they also predicted that the economy would be less vulnerable to these calamities in the coming months.

Still, many FOMC members concluded that “another increase in the target range later this year was likely to be warranted if the medium-term outlook remained broadly unchanged” and that “they would closely monitor and assess incoming data before making any further adjustment to the federal funds rate.”

The return of risk appetite?

U.S. equity indices capped off the day with record highs ahead of the release of quarterly earnings from a number of financial firms.

  • Dow 30 index was up 42.21 points to 22,872.89 (+0.18%)
  • S&P 500 index was up 4.60 points to 2,555.24 (+0.18%)
  • Nasdaq was up 16.30 points to 6,603.55 (+0.25%)

Commodities also ended the session in the green, thanks to the less hawkish Fed minutes and a weaker dollar.

  • Gold is up to $1,295.78 per troy ounce (+0.53%)
  • Silver is up to $17.230 per troy ounce (+0.57%)
  • WTI crude oil is up to $51.09 per barrel (+0.07%)
  • Brent crude oil is up to $56.67 per barrel (+0.02%)

Major Market Mover(s):

USD

The scrilla’s price action reflected disappointment among bulls when their expectations for a strongly hawkish FOMC statement were not met.

EUR/USD popped up to a high of 1.1870, GBP/USD continued to advance to a high of 1.3248, USD/JPY dipped to 112.34, and USD/CHF is down to .9732.

JPY

Surprisingly, the yen was unable to take advantage of dollar weakness as it also fell victim to risk-taking and gave up ground to its higher-yielding peers.

GBP/JPY jumped to a high of 148.89, CAD/JPY broke out of consolidation to test the 90.00 handle, EUR/JPY rallied to a high of 133.51, and AUD/JPY is up to 87.72.

Watch Out For:

  • 1:00 am GMT: U.S. President Trump’s interview on Fox channel
  • 1:00 am GMT: Australia MI inflation expectations (3.8% previous)
  • 1:30 am GMT: Australia home loans m/m (0.5% expected, 2.9% previous)
  • 5:30 am GMT: Japanese tertiary industry activity index (another 0.1% uptick expected)