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EUR/USD Bounces After Sell-Off

July 8, 2015 by

EUR/USD bounced after yesterday’s sell-off as Greece continues to negotiate with creditors in a last-ditch effort to secure its place in the eurozone. Counterintuitively, the crisis in Greece made the dollar underperform compared to the euro as market participants speculated that the problems in Europe may hurt the US economy recovery. Considering the cautious minutes released by the Federal Reserve today, this can encourage the Fed to postpone its planned interest rate hike.

US crude oil inventories demonstrated a slight increase by 0.4 million barrels last week instead of the drop by 0.6 percent predicted by analysts. Total motor gasoline inventories increased by 1.2 million barrels and are in the upper half of the average range. (Event A on the chart.)

FOMC released minutes of June meeting today. (Event B on the chart.) The minutes showed that policy makers are rather cautious and prefer to wait for additional signs of improvement of the US economy. Yet there was one board member who actually thought that an interest rate hike could be possible:

The Committee concluded that, although it had seen some progress, the conditions warranting an increase in the target range for the federal funds rate had not yet been met, and that additional information on the outlook, particularly for labor markets and inflation, would be necessary before deciding to implement such an increase. One member, however, indicated a readiness to take that step at this meeting but also expressed a willingness to wait another meeting or two for additional data before raising the target range.

Consumer credit rose by $16.1 billion in May. The growth was slower than the average analysts’ projection of a $18.5 billion increase and the April’s advance by $21.4 billion.

Yesterday, a report on trade balance was released, showing a slight increase to $41.9 billion in May up from $40.7 billion in April. The median expert’s forecast predicted a deficit of $42.5 billion. (Event C on the chart.)

EUR/USD for 2015-07-09

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