Equities and Dollar Ignore FOMC Growth Warning, React to Rate Forecast
• The market chose to focus on low interest rate rather than growth implications in the FOMC minutes
• A strong rebound from the S&P 500 may not be a coincidence of event risk and technicals
• Meanwhile, if the Dollar extends its decline on the minutes shake up, the pairing matters
Markets seem to have set their priorities. Rather than responding to repeated concerns about the outlook for growth and the stability of the financial system, investors instead jumped on FOMC remarks that seem to extend the low-rate forecast. With the S&P 500 symbolically standing on the verge of a meaningful change in tide after a long and fundamentally dubious climb, we find complacency is still overpowering. In the Fed's minutes this past session, investors interpreted a concern over a troubling outlook for the global economy and belief that a rising Dollar could curb inflation as a sign that the inevitable rate hike could be pushed back a little further. That said, the greenback took the signal and stumbled. Will complacency hold out for risk appetite? Is the Dollar falling into a deeper dive? We discuss that in today's Trading Video.
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.