The Federal Reserve released the minutes of its July 30-31 meeting, at which it held interest rates unchanged below 5.5%, however it noted that recent progress in containing inflation, and the increase in unemployment, are enough reasons to take a decision of a 0.25% rate cut, potentially in September.
The minutes showed the members’ varying opinions between June and July, while adding just a phrase that says inflation has receded last year, but remains high somewhat.
They noted recent progress in battling inflation, while removing the word “modest’ in describing inflation control.
The Fed nonetheless dropped the word “very” from its “the Committee will remain very vigilant to inflation risks”, which indicates less concerns.
The minutes clearly show the Fed is now focused on stabilizing inflation, with full employment, instead of just inflation.
US stock indices rose on Wednesday as investors await more signals about the Fed’s policies.
Later today, the Federal Reserve will release the minutes of its July policy meeting, at which it held interest rates unchanged.
Now investors hope they’ll find clues that confirm expectations of a September rate cut, and especially the size of it.
Otherwise, earlier US labor data showed actual jobs growth was less by 30%, or 818,000, than monthly payrolls data indicated in the 12 months ending March 2024.
On trading, Dow Jones stabilized at 39,825 as of 16:49 GMT, while S&P 500 rose 0.1%, or 9 points to 5606, as NASDAQ added 0.2%, or 34 points to 17,845.
- Dollar’s stall pressures gold prices
- Markets await clues about US rate cuts
Gold prices fell in European trade on Wednesday away from record highs on profit-taking, while the dollar regained its ground against major rivals.
Now markets await the Federal Reserve’s latest meeting minutes to get a clearer picture on the future of US rate cuts.
Prices
Gold prices fell 0.35% today to $2505 an ounce, with a session-high at $2519.
On Tuesday, prices rose 0.4%, the third profit in four days, hitting record highs at $2531 an ounce.
The Dollar
The dollar index rose 0.2% on Wednesday, holding its ground above eight-month lows at 101.31 against a basket of major rivals.
The Fed is about to launch a new policy easing cycle in the US next month as inflation slows down and approaches targets.
US Rates
According to the Fedwatch tool, the odds of a 0.5% Fed rate cut in September stood at 33%, and at 67% for a 0.25% rate cut.
Fed’s Minutes
Later today, the Federal Reserve will release the minutes of the July 30-31 policy meeting, at which it held interest rates unchanged at below 5.5%.
The Fed said back then that progress in containing inflation has been achieved, with inflation approaching 2%.
Jerome Powell said the Fed is likely close to the point of taking the decision to cut interest rates, especially if inflation continues its decline.
- Markets await Kazuo Ueda’s speech ahead of Parliament
- US treasury yields drop before Fed minutes
The yen gained ground in Asian trade on Wednesday against a basket of major rivals, extending its gains for the fourth session in a row against the dollar, and hitting two-week highs, as traders await Bank of Japan Governor Kazuo Ueda’s speech ahead of the Japanese National Diet.
US yields continued to sustain losses ahead of the release of the Fed’s latest meeting minutes, which could include clues on the future of US rate cuts.
The Price
The USD/JPY pair fell 0.25% today to 144.93, the lowest since August 8, with a session-high at 145.59.
The pair closed up 0.9% on Tuesday, the third profit in a row as US yields dropped.
National Diet
Traders await a special session in Japan’s National Diet on Friday to discuss the BOJ’s latest policy decisions and surprise rate hike last month.
Ueda will speak about the latest decision, with investors paying close attention to his tone in particular which could help determine the likely path ahead for policies.
US Yields
US 10-year treasury yields fell 0.3% today, on track for the fourth fall in a row, plumbing two-week lows at 3.797%.
The developments came as the Federal Reserve prepares to launch a new cycle of policy easing in the US soon.
Investors await the Federal Reserve’s July meeting minutes later today to help guide speculations about policies.
According to the Fedwatch tool, the odds of a 0.5% Fed rate cut in September stood at 33%, and at 67% for a 0.25% rate cut.
A reduction in long-term government yield gap between Japan and the US would boost the yen’s standing against the dollar and other major rivals.
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