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EUR/USD Flat Despite Volatility Caused by FOMC Minutes

July 5, 2017 by

EUR/USD demonstrated volatility after the Federal Open Market Committee released minutes of its latest policy meeting. Yet despite the volatile moves, the currency pair was trading almost flat as of now. The notes showed that FOMC members were in favor of gradual reduction of monetary accommodation, but they gave no hints about timing of additional interest rate hikes.

Factory orders fell 0.8% in May, more than in the previous month (0.3%) and than was predicted (0.5%). (Event A on the chart.)

FOMC released minutes of its June policy meeting today. The notes showed that the Committee member were in favor of reducing monetary accommodation:

In their discussion of monetary policy, participants generally saw the outlook for economic activity and the medium-term outlook for inflation as little changed and viewed a continued gradual removal of monetary policy accommodation as being appropriate.

The minutes then added:

Participants generally reiterated their support for continuing a gradual approach to raising the federal funds rate.

FOMC members also discussed reduction of Federal Reserve’s balance sheet and explained details of the reduction in a special addendum. (Event B on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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