Today at 19:00 London time the FOMC minutes for the last meeting will be published. The release could likely put further downward pressure on the US currency.
The US dollar continues to decline as the Federal Reserve’s earlier promises were not matched to their actions. The last FOMC meeting held in March also disappointed investors after the Fed decided to take a significantly more dovish stance than the one it undertook in December.
At the last speech, Fed Chairwoman Yellen underlined the caution with changes to the monetary policy being considered. The patient approach pushed the dollar downwards, with its index now trading below the 95.00 level, being its 5-month low.
The earlier promised four rate hikes in 2016 are now changed to a mere two, and even these are not guaranteed. As the CME Fed Watch Tool shows, the chances that the Fed will increase interest rates in September are around 40% at the moment.
Furthermore, investors give just an 18% chance of hawkish actions by the Fed in June and 57% in December. Nevertheless, keeping in mind the last speech of Janet Yellen, the future policy will be much more accommodative to the state of the domestic economy, which is represented by the inflation rate and jobs market. Global circumstances will also continue to be observed.
At the moment, the cheap dollar could actually be of a benefit to the US economy, as local production will be supported. Also, that is the way to keep the cost of the domestic debt at affordable levels, which is imperative to the world’s largest economy.