FOMC minutes showed Fed would keep raising rates

　　

The FOMC minutes reaffirmed multiple things that Chairman Jerome Powell attempted to communicate to market participants during his previous speech in December of 2022. The minutes reiterated the central bank’s determination to bring the inflation level down to the targeted 2%; furthermore, citing previous experiences with pre-mature rate cuts, the minutes dismissed any notions of a rate cut in 2023, even though the Fed has slowed its pace in December. Most importantly, the minutes indicated that the Fed would not cease hiking rates until the central bank sees ample evidence of inflation on a steady and convincing downward trajectory towards 2%.

U.S. equity markets experienced a turbulent trading session as major economic data releases peppered yesterday’s American trading session. All three major equity indices closed higher by the bell. The Dow Jones Industrial Average gained 0.4% to close at 33269.77. The S&P 500 climbed 0.75% to close at 3852.97. The tech-heavy Nasdaq Composite climbed 0.69% to close at 10458.76.

The JOLTs job openings for November came in at 10.458M positions, despite being lower than last month’s print, this figure exceeded market expectations of 10M. The BLS report continues to show that the labour market remains tight, while the labour participation rate has continued to decrease. The job data release foreshadowed the hawkish FOMC minutes, which were released during the latter part of the American trading session.

Main Pairs Movement

The Dollar Index went through a slight fluctuation trading day as the market news was released with US JOLTs JOB Openings (Nov.) & FOMC Meeting Minutes. The DXY sets back around 0.4% after the previous day’s hiking by over 1.10%. The price bounces off lows and regians 104.0 ahead of FOMC’s meeting minutes.  The US Dollar was little changed with the news, although US short-term interest-rate futures dropped.

EURUSD struggled to retain 1.0600 after the FOMC meeting minutes release. EUR/USD has lost its bullish momentum and pierced the 1.0600 thresholds following hawkish FOMC Meeting Minutes and tepid US data weighing on the market’s optimism. Bulls, however, are not yet done.

Cable gains 0.64% throughout Tuesday’s trading. A little changed every week. The negative real GDP of the UK recession undermind demand for the Pound.

Gold continues its bull momentum, raised 0.8% throughout Tuesday’s trading, with yields dropping post-FOMC minutes.

Economic Data

Currency	Data	Time (GMT + 8)	Forecast
GBP	Composite PMI (Dec)	17:30	49.0
GBP	Services PMI (Dec)	17:30	50.0
USD	ADP Nonfarm Employment Change (Dec)	21:15	150K
USD	Initial Jobless Claims	21:30	225K