Dollar steady ahead of FOMC minutes 💲

July’s meeting marked the first dual dissent in years, with Governors Waller and Bowman voting for a 25 bp rate cut 📣

The dollar index continues to consolidate around the 98 level, near the 61.8% Fibonacci retracement, just hours before the release of the minutes from the latest FOMC meeting. Markets appear to be catching their breath ahead of Fed Chair Jerome Powell’s Friday speech, which could set a clear pivot for U.S. monetary policy—and by extension, for the dollar.

Key takeaways from the last FOMC meeting:

• July’s meeting marked the first dual dissent in years, with Governors Waller and Bowman voting for a 25 bp rate cut, in contrast to the rest of the Committee.

• Powell’s press conference struck a distinctly hawkish tone. Notably, he said the Fed is effectively “looking past” inflation, refraining from hiking rates despite the continued pass-through of tariff costs to consumers.

• The labor market remains the key driver for policy decisions, with unemployment currently viewed as the most important indicator shaping rate outlooks.

• The minutes could reveal how FOMC members view key economic variables (inflation, unemployment, NFP) and shed light on divisions over the appropriate level of interest rates.

Despite Powell’s hawkish remarks, the FOMC is clearly divided over further easing. The July meeting ended with a rare 9-2 vote, with Bowman and Waller pushing for cuts. Both have since reiterated their views: Waller warned the Fed risks being too reactive and falling “behind the curve,” while Bowman argued tariff-driven inflation is temporary and should not justify keeping rates elevated. Powell acknowledged their reasoning as valid during his press conference.

While inflation was downplayed in July, subsequent data—particularly the rise in core inflation and the unexpected jump in producer prices—could sharpen divisions within the Fed. Powell’s upcoming Jackson Hole speech may carry an unexpected pivot, signaling renewed concern over the dual risks of sticky inflation and a weakening labor market.

Markets are currently pricing in an 83.6% chance of a 25 bp cut at the September 16–17 meeting. Meanwhile, Trump continues to press for further easing. Waller and Bowman are also seen as potential successors to Powell once his term expires in May 2026.

For now, the dollar and U.S. 10-year yields remain stable, though volatility could return later this week with Powell’s Jackson Hole address.