Article / 06 July 2016 at 23:27 GMT

US Market Wrap: FOMC minutes reveal cautious Fed thinking

FX Consultant / IFXA Ltd
saxo rates


  • Australia: AIG Performance of Construction Index 2330 GMT 
  • Japan: Foreign Investment 2350 GMT                                                       

US Data released

  • Trade Balance-May (Actual -41.14 billion vs. forecast -40.0bn) 
  • ISM non-Manufacturing PMI (Actual 56.5 vs. forecast 53.3) 
  • API Weekly Crude Stocks (Actual -6.736 million barrels vs previous -3.86mln) 

The Federal Open Market Committee minutes didn’t provide a whole lot of fresh insight into the US interest rate debate. Markets knew that the Fed was spooked by the Brexit vote and the weak nonfarm jobs report. Still, the cautious, nervous tone in the minutes certainly killed any prospects of a July rate hike.

The G10 currencies had a pretty good day and recouped some of this week's losses. But GBPUSD was the exception. EURUSD moved higher in a choppy fashion in the early going but shed those gains around the 1000 EDT (1400 GMT) option cut. The rally resumed and EURUSD closed near the high for the session. USDJPY started the day at the European session low of just ¥100.19 and never looked back, gaining steadily to close at ¥101.30. The Canadian dollar led the commodity bloc currencies higher as oil prices recovered.

US equity indices managed to squeeze out gains after the FOMC minutes supported by the belief that US rate hikes won’t go ahead any time soon.

WTI crude oil started the session at $45.88/barrel, the low of the day and headed straight up. At the end of the day, the API Crude stocks report showed a huge drawdown. WTI popped to $47.85/b in after-hours trading. Obviously, not everyone was surprised. 

Local vote, global impact ... the FOMC minutes showed that the Fed was spooked by the impending Brexit referendum and a weak nonfarm jobs report. Photo: iStock


Everything you need to know in about what's happening to GBPUSD is summarised nicely by TradingFloor Deputy Editor, Clare MacCarthy in: INFOGRAPHIC: The post-Brexit decline and fall of sterling.

And don't miss TradingFloor contributor, Stephen Pope's article: Bigger than Brexit? Italian banks threaten the EU

Michael O'Neill is an FX consultant at IFXA Ltd. Follow Mike or post your comment below to
engage with Saxo Bank's social trading platform.
Missed a day? Here’s what we had to say during our Asian session and our regular European Morning Markets, From the Floor and Mid-session Europe. 
07 July
Estuardorlemus Estuardorlemus
Hi Mike, how does a strong NFP could impact on the USDCAD, should that suggest a strong USD? best regards
07 July
Michael O'Neill Michael O'Neill
A strong NFP should lead to USDCAD gains


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