The Australian and New Zealand Dollars are trading flat ahead of the U.S. opening. The currencies started the session strong, but the rallies stalled as investors pared positions ahead of today’s Fed Monetary Meeting Minutes at 1800 GMT.
At 1025 GMT, the AUD/USD is trading .7786, up 0.0009 or +0.12% and the NZD/USD is at .7069, unchanged for the session.
The Forex pairs are basically following the direction of the U.S. Treasury markets which are relatively flat Wednesday. The yield on the benchmark 10-year Treasury Note is trading flat around 2.344 percent while the yield on the 30-year Treasury Bond was flat at 2.878 percent.
Investors are going to pore over the minutes Wednesday for any signs as to what the Federal Reserve may do before the end of the year, and what it currently thinks of the U.S. economy.
The highlight of the session will be the Federal Open Market Committee Meeting Minutes, due for release at 1800 GMT.
The Fed minutes are expected to show that inflation was the major topic of discussion. Fed Chair Janet Yellen in her press conference following the meeting noted that low inflation this year, despite a substantial improvement in labor market conditions, created uncertainty for monetary policymakers.
Near the end of her press conference, Yellen concluded that low inflation may be “transitory” and that it had not persisted long enough to negate the need for gradual policy tightening.
It should also be noted that several FOMC policymakers have indicated a preference for allowing inflation to pick up before raising interest rates any further.
We expect to see volatility with the release of the minutes. This is because it will have an impact on the U.S. Dollar.
Traders should also be on the lookout for an announcement from the White House regarding its choice for U.S. Federal Reserve chairman. The market thinks Trump is going to nominate a person who believes “low rates”. Traders should also watch for any fresh information on U.S. tax reform.
This article was originally posted on FX Empire
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