BREAKING: USD drops after dovish FOMC minutes

FOMC minutes from the July meeting were released today at 7:00 pm BST. Markets were hoping for some dovish hints - July's meeting message was overall rather dovish, with Fed hinting that it is now more focused on dual-mandate (inflation and jobs) rather than inflation only. Nevertheless, as market has already been pricing significant easing from Fed in the remainder of 2024, the release was not expected to trigger any major moves unless a big surprise was offered.

Actual document included some interesting mentions

• Vast majority of FOMC members said that it would likely be appropriate to cut rates at the next meeting
• Several participants said recent inflation progress and increase in unemployment rate provided plausible case for 25 basis point rate cut at July meeting or that they could have supported such a move
• Majority of participants said risks to employment goal had increased, while many noted risks to inflation goal had decreased
• All participants supported maintain policy rate in current range
• Participants viewed the incoming data as enhancing their confidence in inflation

Some of the headlines above have been strongly dovish, especially the one saying that vast majority of FOMC members saw September rate cut as appropriate. However, September rate cut is very well priced in already and therefore markets' reaction was somewhat limited. USD weakened, with EURUSD jumping to a fresh daily highs above 1.1160. US indices moved higher initially, but has erased those gains later on. Overall, scale of the moves was small.

Source: xStation5