All eyes on the release of the FOMC minutes

All Eyes on the Release of the U.S. FOMC Minutes

07.07.2021

Yesterday, stock prices fell in both European and U.S. markets, leading to a risk-off environment characterized by falling stock prices, lower interest rates, and a weaker U.S. dollar. Germany’s July ZEW Economic Sentiment Index, released yesterday, came in at 63.3 against a forecast of 75.2; however, it remains at a high level and does not indicate a recession. Gold rose to the 38.2% Fibonacci retracement level on the daily chart but then pulled back and is currently trading around $1,800.

In the foreign exchange market, Oceania currencies are trading lower. In particular, the AUD/USD pair, following yesterday’s announcement by the RBA (Reserve Bank of Australia) that it would keep interest rates unchanged, fell by about 100 pips shortly after the announcement and is currently trading around 0.749.The RBA announced that it would "begin tapering quantitative easing in September, reducing government bond purchases from A$5 billion to A$4 billion per week," thereby signaling a gradual exit from its accommodative monetary policy.

Today, at 3:00 PM Asia time, German industrial production will be released, followed by Frenchtrade balance and current account balance, UK Halifax house prices at 16:30 during European trading hours, the US MBA mortgage applications index at 20:00, the Canadian Ivey PMI and US JOLTS survey at 23:00 during US trading hours, the release of the June FOMC minutes at 27:00, and remarks by Bostic, President of the Atlanta Fed, at 28:30.Ahead of today’s release of the U.S. FOMC minutes, I intend to wait and see how currency strength and weakness evolve.