This afternoon New York time, the Federal Reserve will release the minutes of the previous FOMC meeting, which sets the interest rate and provides forward guidance for the market in the U.S. Dollar in the shape of economic projections and textual commentary. The meetings themselves tend to move the markets more than later releases of more detailed minutes, so it might not be a dramatic event, but it feels like it is going to be the highlight of this week for the Forex market, which has had a quiet few days. The hours preceding the FOMC release are also going to see releases of Core Durable Goods Orders and Unemployment Claims data, which could also have an impact. So, the week’s highest volatility in the greenback is likely to happen today.
The market has an extremely strong consensus that the FOMC will next month raise interest rates by 0.25% to 1.50%. Some analysts put the odds of such a December hike at 100%! For this reason, its hard to see any surprise upside for Dollar bulls, but there could be one for Dollar bears if anything transpires today to shake the picture of a strong and strengthening U.S. economy. It seems very unlikely that there might be anything in the Minutes to match that description. Scrutiny will be most keen in the direction of whether there are dissenting members worried about raising rates while inflation remains materially below the 2% target, and the strength of any expressed dissent. Any surprises here, and there should be a fast drop in the Dollar. This suggests that any “long shot” positioning ahead of the release should be in favor of currencies or commodities trending up against the greenback, including perhaps Crude Oil, the British Pound, and maybe even the Euro.