The start to the North American trading session has been lacking for economic announcements thus far, but that void will be filled a little later today with the Federal Reserve releasing their minutes from the most recent monetary policy decision. I’m sure everyone remembers that the Fed dropped the term “patient” from their statement at the time, but it is the minutes, and the debate therein, that will ultimately determine if the market remains with the belief that the Fed is dovish, or switches to a hawkish belief. That deterministic distinction will likely wreak havoc on markets worldwide, particularly if the venerable institution is deemed to be more hawkish than was originally assumed.
The problem with thinking that they were more hawkish than initially thought is that Fed Chairwoman Janet Yellen was very frank in her press conference after the decision. She made sure to hammer home that point that their future decisions would be data dependent, and that raising the interest rate at their next meeting on April 29 was highly unlikely. The bad Non-Farm Payroll figure we experienced last week likely isn’t helping any hawkish cause despite the fact that one bad result doesn’t really sway opinion of central bankers who are looking out at much longer time frames.
The statement the Fed released was written in a cautious tone, and Yellen’s press conference echoed that sentiment as well, so it’s likely the market got it right at the outset. If we were to assume that that is the case, a similar, but less severe, reaction to the minutes may be in store. One instrument that could be setting up for a reaction in that fashion on the technical front as well is silver. The precious metal has been trending higher for about a month now, but a recent pullback has brought it down to previous support near 1650.00 which could be a potential point for a rally in this instrument. If the Fed actually was as dovish as the market originally assumed, a resumption of the longer-term upside may be in store.
Source: www.forex.com
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