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May 20 - 09:55 AM

USD: FOMC Minutes Triggers USD Bounce But Follow-Through USD Buying Unlikely - MUFG

By eFXdata  —  May 20 - 08:30 AM

MUFG Research discusses the USD outlook in light of yesterday's FOMC Minutes from the April meeting.

"The US dollar’s biggest move came in response to the FOMC minutes that included the comment that “a number of participants suggested that if the economy continued to make rapid progress toward the Committee’s goals, it might be appropriate at some point in upcoming meetings to begin discussing a plan for adjusting the pace of asset purchases”, MUFG notes.

"We are not convinced that there will be much follow-through buying of the dollar on the back of this development.

It is not hugely surprising that a “number  participants” are thinking this way given four FOMC members according to the DOTS are looking for a rate hike next year and given the current market consensus is that tapering will begin at some stage in Q4 or around the turn of the year.....Furthermore, a move by then would only be consistent with the timing from other G10 central banks running QE programs and hence the FX impact would be less significant," MUFG adds. 

Source:
MUFG Research/Market Commentary

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