US Dollar Rallies Following the Release of the FOMC Minutes
Today the FXCM US Dollar Index (Ticker: USDollar) rallied after the release of the Minutes from the June FOMC meeting. The Minutes reiterated the information that was given in the FOMC’s statement and Fed Chairman Ben Bernanke’s press conference on June 20th. The statement and the speech outlined that the Fed would be holding interest rates at 0.25 percent, and announced the extension Operation Twist. The event shattered some trader’s hopes for a more likely path towards a third round of the Quantitative Easing.
Chart Created By Adrian Robles, GMT 5 min created in MarketScope
The US Dollar Index rallied 30 points following the release of the FOMC Minutes. The price action following this event risk came at some surprise given that the Minutes did not offer any new information. This suggests the market was expecting further progress towards the acceptance towards and implementation of additional stimulus. The pop in the US Dollar suggests that traders are currently more concerned about the stability of the currency than the economic growth of the underlining country. As such the market is likely to have a risk aversion atmosphere until a policy authority announces further accommodation or data show a significant recovery.
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