Back in January, the FOMC made a complete U-turn on its monetary policy stance. FOMC members effectively noted that the balance sheet could be adjusted if need be. Furthermore, the FOMC called for â€˜patience’ with future rate hikes. At the time, this generated a large amount of weakness for the greenback. Eyes are on a potential dovish statement from the central bank, with close attention to the language used.
Market participants will be looking for further confirmation that the bank’s hiking cycle is over. As a result, this could potentially force pressure to the downside on the USD, should the market interpret such a tone from the FOMC.
Federal Open Market Committee January meeting minutes are due for release on Wednesday 2018 February 2019 at 1900GMT (03:00 HK/SG)
Here's what they are watch:
- January meeting codified flexibility, "wait and see" approach
- Minutes to be read for additional insight on what conditions FOMC would like to see before making the next policy change
- Particular attention may be focused on balance sheet normalization - Powell's presser indicated the normalization path is flexible, & suggested there was a willingness to use the balance sheet as a tool if economic conditions warranted