EUR/USD declined by more than 0.49% on Wednesday, following the release of the Federal Reserve’s minutes, which suggested that the central bank might forgo an interest rate cut during the December meeting, as indicated. The pair is currently at 1.1524, following a daily low just below 1.1600.
EUR/USD declines as the likelihood of a December Fed rate cut decreases from 42% to 33% following the hawkish FOMC minutes. Recent minutes indicate significant divisions within the Federal Reserve, as a majority oppose further easing measures despite the softness observed in the labor market. Eurozone HICP declines to 2.1%, approaching the ECB target, as attention turns to US employment and confidence metrics.
> The Euro declines by almost 0.5% following the release of FOMC minutes, which indicate that the majority of Fed officials are against easing at the upcoming meeting : The minutes revealed a division within the Fed, as the majority of members were against a rate cut in December during the meeting held on October 28-29. The likelihood of a rate cut decreased from approximately 42% to 33%, as indicated. In the Eurozone, the Harmonized Index of Consumer Prices experienced a decrease from 2.2% to 2.1% in September, approaching the European Central Bank’s inflation target of 2%. The year-over-year figure for Core HICP stood at 2.4% during the specified timeframe. Upcoming on the US economic calendar are key employment indicators, including Nonfarm Payroll figures, Initial Jobless Claims, and remarks from Federal Reserve officials. In Europe, the agenda appears sparse, as traders focus on Eurozone Consumer Confidence.
Latest FX Rate Trends : Fed minutes impact the Euro
- Minutes from the Federal Reserve indicated that “Many participants were in favor of lowering the target range for the federal funds rate,” while others expressed contentment with maintaining current rates. The minutes indicated that the Committee is apprehensive regarding inflation and that additional easing “could add to the risk of higher inflation becoming entrenched.”
- The minutes indicated that policymakers “Several” support a December reduction as likely appropriate, while several others viewed lower rates as eventually suitable, though not necessarily by December. Meanwhile, “many participants” had already dismissed the possibility of a December cut.
- The US Nonfarm Payroll figures for September are set to be disclosed on Thursday. Economists anticipate that the economy is poised to increase the workforce by 50K individuals, surpassing the August figure of 22K.
- The Euro faces pressure due to the strength of the Dollar. The US Dollar Index, which measures the performance of the American currency against six others, has increased by 0.54%, reaching a level of 100.13.