The minutes of the July 29-30 FOMC meeting are due out at 1400 GMT (2pm ET)
Let’s start with the links:
- The July 30 FOMC statement
- The redline from the most-recent statement
- The minutes of the June 17-18 meeting
Here are 5 things the Fed said in the statement where we could see the market move:
1. “Labor market conditions improved … but … a range of labor market indicators suggests that there remains significant underutilization of labor resources”
There will be more positive comments on the labor market in the minutes and that could give the US dollar life. The flipside is that it seems like everyone will use that strength to sell on expectations that Yellen will downplay the labor market on Friday.
2. “Recovery in the housing sector remains slow”
Downbeat comments on housing will underscore yesterday’s strong housing starts data but the broader picture is still mixed and the Fed won’t be able to convince markets that housing is about to roar.
3. Look for geopolitical worries to play a big part
At the time of the meeting fears about Iraq, Russia and Gaza were higher than they are now. The market knows the geopolitical story so expect it to brush off these worries.
4. “Considerable time”
How long is it and what does it mean? This is the biggest question in markets and any light on a timeline could make a major stir in markets but, again, there will be those how fade it because they expect Yellen to be dovish.
5. “Inflation has moved somewhat closer to the Committee’s longer-run objective … the likelihood of inflation running persistently below 2% has diminished somewhat”
This was the main development in the statement and the baby step toward normalization. More aggressive comments in the minutes could set off a US dollar rally.
