What to look for in the FOMC Minutes
The US dollar is on the backfoot ahead of the FOMC Minutes. Maybe it's in anticipation of something dovish in the account. Is that justified?
I don't think it is but the long history of the FOMC Minutes is one of head fakes. The market moves on the newswire headlines but those don't always tell the story and you often get a reversal.
The thinking right now is that the Minutes will be dovish because Powell was exceptionally dovish in his press conference last month.
"The underlying economic fundamentals are slow," he said.
The Minutes are also dated so they tell you more about what the Federal Reserve was thinking on March 20, that what they're thinking right now.
The latest comments from the Fed have been more upbeat. Last week we heard from Harker, Kashkari and Mester -- they were all upbeat.
Harker "My continues to be in wait-and-see mode, and my outlook for rates remains, at most, one hike for 2019 and one for 2020.
Mester said her bias was still towards hiking.
Kashkari "We're not sure yet if that's a real economic downturn or if it's just noisy data."
The market is pricing in a 58% chance of a Fed cut before year-end but I just don't see it. It's certainly not impossible but the data isn't showing that yet and with the stock market back near the highs, the Fed isn't going to give a signal justifying that hope any time soon.
Naturally, we'll be watching the data but I think a dip in the dollar might be worth buying.
