US Dollar Surges Ahead Of FOMC Minutes

FOMC minutes are expected to keep the US dollar supported. The dollar gains about 2% off the highs of the year, ahead of today’s release of the 27 July FOMC minutes.

Last FOMC’s meeting, in particular, triggered dollar selloff on the view that the Fed might have already taken the policy rate to a neutral level and that future rate hikes would be undertaken on a meeting-by-meeting basis.

The question is whether the Fed wants to use the minutes as a communication tool to push back against the view of a 2023 easing cycle. Post-meeting Fed’s stance suggests that this will be the case.

The Dollar Index, depicting the US dollar’s performance against the basket of major currencies, rose around 106.763. The dollar held onto gains against other major currencies on Wednesday, ahead of the release of minutes that could give further clues about the pace of further interest rate hikes.

The dollar also recovered the ground it earlier lost since softer than expected inflation data last week led to investor bets that price rises may have peaked, weakening the dollar.