empty
 
 

Forex Analysis & Reviews: The Fed's minutes: split opinions, QE-4 issue and risks of US-China conflict
time 10.10.2019 06:12 AM
time Relevancia, 11.10.2019 06:09 AM

The minutes of the Federal Reserve are relatively rare to provoke strong volatility among dollar pairs. As a rule, after a two-week period after the last meeting, the market is already aware of the general mood of the regulator, thanks to the speeches of many of them. Yesterday, the Fed minutes was no exception in this regard: its key points were not a revelation for traders, so the dollar reacted minimally to this release. In addition, market participants are waiting for other, more important and relevant events of a fundamental nature - first of all, we are talking about trade negotiations between the United States and China, as well as data on the growth of US inflation, which will be published today.

Nevertheless, it is not worth completely ignoring the "minutes". And although this document did not affect the dynamics of the dollar in the moment "here and now", its value should not be underestimated. For example, yesterday's release once again reminded the market that the Fed had a serious split of opinions, and this fact may affect further decisions of the US regulator.

This image is no longer relevant

Let me remind you that at the September meeting, the Federal Reserve lowered the interest rate by 25 basis points. Against this step were such members of the Fed as the head of the Federal Reserve Bank of Kansas, Esther George and the head of the Federal Reserve Bank of Boston, Eric Rosengren. They were against easing the monetary policy in July, so the last meeting only confirmed their position. Moreover, the dot plot of the Fed members' expectations (dot plot) suggests that George and Rosengren are not united in their opinion. So, seven officials of the Federal Reserve stated the appropriateness of further steps to mitigate monetary policy, while five of their colleagues spoke in favor of maintaining a wait-and-see attitude - at least until the end of the year. Another five Fed members did not rule out a 25-point rate increase.

As you can see, the opinions of the Committee members diverged significantly: each has its own arguments in favor of a particular decision. So, according to the doves, the Federal Reserve needs to play ahead of schedule - according to them, lowering the interest rate will help offset the negative consequences of a slowdown in the global economy. In addition, the trade conflict with China has a negative impact on the prospects for US economic development. Supporters of soft monetary policy also pointed to a weak inflation rate, the base indicator of which has not been able to reach the target two percent level for a long time. According to the hawks, the regulator in this case is ahead of the events, depriving itself of the corresponding leverage that will be needed in the future. They believe that the most severe economic upheaval (possibly) is yet to come, so the regulator needs to pause now or even increase the rate by 25 points.

Despite the existing split in the Fed camp, the market is almost certain that the regulator will resort to another round of rate reduction: the probability of this step is almost 90%. Many of them do not exclude a double decline in November and December. In my opinion, such a scenario will be implemented in the event of the failure of the US-China negotiations and a new round of trade war. It is necessary to note one more important thesis of the published minutes: members of the Federal Reserve agreed that they would make decisions on rates, focusing on economic data. It is worth recalling that in recent years, US releases have not pleased dollar bulls: the producer price index and the ISM production index came out in the red zone, slowing down and not significantly reaching forecast values. If today's data on inflation in the US will also disappoint, then the likelihood of at least one rate cut will increase to 100%.

Another important nuance. During his last speech, the head of the Fed unexpectedly announced that soon the US central bank will resume regular operations on the open market, increasing its balance sheet account. The market interpreted this step in its own way - according to a number of experts, the regulator, in fact, starts QE-4, although Powell emphasized separately that this is not about the resumption of the stimulating program. According to the minutes of the September meeting, members of the regulator discussed this issue. The head of the Fed said that a series of "spot money injections" to maintain an adequate level of reserves is different from a full-scale quantitative easing program, and markets should understand and accept this difference.

This image is no longer relevant

Thus, the essence of the published minutes is as follows: The Federal Reserve is ready to lower the interest rate further. Another question is when exactly this must be done: before or after possible economic shocks. Some advocate the use of preventive measures, while others urge not to spend leverage that may come in handy in the future.

All this suggests that the fate of the interest rate again depends on the outcome of trade negotiations between Washington and Beijing. If they fail, the rate will probably be reduced at the next meeting. Otherwise, the regulator may take a wait-and-see attitude until the beginning of next year, tracking the dynamics of key US macroeconomic indicators.

Benefíciese de las recomendaciones de los analistas ahora mismo
Recargue su cuenta de operaciones
Abra una cuenta de operaciones

¡Los informes analíticos de InstaForex lo mantendrá bien informado de las tendencias del mercado! Al ser un cliente de InstaForex, se le proporciona una gran cantidad de servicios gratuitos para una operación eficiente.

  • Opere de forma inteligente, gane un dispositivo
    Recargue su cuenta con al menos $500, regístrese en el concurso y tenga la oportunidad de ganar dispositivos móviles.
    UNIRSE AL CONCURSO
  • Ferrari de InstaForex
    Recargue su cuenta con al menos $1000
    únase al concurso y gane un Ferrari
    F8 Tributo
    UNIRSE AL CONCURSO
  • Depósito al azar
    Deposite su cuenta con $3000 y gane $1000
    UNIRSE AL CONCURSO
  • 100% de bonificación
    Su oportunidad única de obtener un bono del 100 % en su depósito
    OBTENER BONO
  • 55% de bonificación
    Solicite un bono del 55% en cada depósito
    OBTENER BONO
  • 30% de bonificación
    Reciba un bono del 30% cada vez que recargue su cuenta
    OBTENER BONO

Recommended Stories

GBP/USD. Análisis para el 5 de diciembre. Antes de las reuniones de los bancos centrales, la libra sigue subiendo.

El par de divisas GBP/USD también hizo un lento intento de comenzar una corrección a la baja el viernes, pero no pudo romper ni siquiera por debajo del promedio móvil

Paolo Greco 08:39 2022-12-05 UTC+2

EUR/USD. Vista previa de la semana:

Lo más probable es que, en un futuro próximo, el par EUR/USD quede a la deriva y se negocie en un amplio rango de precios, reaccionando de manera refleja

Irina Manzenko 08:30 2022-12-05 UTC+2

EUR/USD. Análisis para el 5 de diciembre. ¿Hay una nueva oportunidad para el euro?

El viernes, el par de divisas EUR/USD cotizó al alza una vez más, pero esto no es sorprendente dado que el euro ha estado aumentando casi a diario

Paolo Greco 08:05 2022-12-05 UTC+2

¿El último suspiro de Bitcoin?

El Bitcoin perdió cerca del 16% de su valor en noviembre, y si los patrones estacionales continúan, diciembre puede ser una decepción para los toros del BTCUSD. La historia muestra

Marek Petkovich 10:51 2022-12-02 UTC+2

El Banco Central Europeo no sabe cómo proceder con las tasas de interés

El euro ha subido a nuevos máximos mensuales frente al dólar, pero las recientes declaraciones de políticos europeos, entre ellos la presidenta del Banco Central Europeo, Christine Lagarde, limitarán

Jakub Novak 10:51 2022-12-02 UTC+2

Análisis del par GBP/USD. El 2 de diciembre. La libra esterlina se ha disparado.

El par de divisas GBP/USD subió al menos 350 pips el miércoles y el jueves. Esto es todo lo que hay que saber sobre lo que ha hecho el mercado

Paolo Greco 09:19 2022-12-02 UTC+2

EUR/USD. Todos los ojos puestos en los datos no agrícolas

El enfoque principal está en el informe de nóminas no agrícolas. Si los datos también dejan caer a los alcistas del dólar (además del índice manufacturero PCE e ISM)

Irina Manzenko 09:04 2022-12-02 UTC+2

USD/JPY. ¿El Banco de Japón está cambiando las reglas del juego?

Los operadores del par USD/JPY reaccionan al trasfondo fundamental que ha cambiado repentinamente. Por primera vez en mucho tiempo, el yen recibió apoyo del Banco de Japón. Hasta ahora

Irina Manzenko 08:55 2022-12-02 UTC+2

EUR/USD. Análisis para el 2 de diciembre. El discurso "neutral" de Powell provocó una huida masiva del dólar.

Ya hemos dicho en nuestras recomendaciones comerciales diarias que los movimientos actuales son ilógicos y desgarrados. Esto está en el marco de tiempo por hora o inferior. Pero las cosas

Paolo Greco 07:57 2022-12-02 UTC+2

La perspectiva a mediano plazo del EUR/USD parece alcista

El intento del presidente de la Reserva Federal de EE. UU., Jerome Powell, de arrojar un hueso tanto a los "alcistas" como a los "bajistas" sobre el dólar estadounidense

Marek Petkovich 17:50 2022-12-01 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.