FOMC Meeting and Crude Oil Data on Tap, What’s in It For USD?

With FOMC meeting minutes and crude oil data on tap, traders are wondering what’s in it for USD trading today and the days to come.

FOMC Meeting on Tap

Awaiting important data releases today, investors are on the back foot and all eyes and ears to the news. Deutsche Bank analysts published a succinct preview allowing us traders to take a peek behind the scenes of the FOMC meeting today. In anticipation of the big meeting minutes release, analysts do not expect market participants to lose hope for the probability of further rate hikes in December. A number of Fed officials including 2018 FOMC voters Bostic, Mester, and Williams said they were open to reconsider the Fed’s broader operating framework.

“In turn, we would not be surprised to see officials beginning to discuss potentially major changes to elements of its operating framework that could include the inflation target or other related strategies such as price level targeting.

Former Fed Chair Bernanke has also recently weighed in on this topic, arguing in favor of temporary price level targeting if the fed funds rate hits the effective lower bound in the future”, Deutsche Bank notes.

Fed Chair Janet Yellen however warned about hasty rate increases.

What’s in it for USD?

These comments keep USD bulls on the back foot, sending EURUSD to lows targeting 1.25 levels in the 12-month term. However, DB analysts suggest that any dips seen by the pair “should be shallow and short-lived as fundamentals still provide support to the cross and as notably a reversal in debt flows is a key source of upside EUR risks over the medium term”.

Currently the pair trades around 1.17416 and is en route to 1.80 levels as the US dollar index extends its downside stance at 93.76, losing around 0.23%. This points to a stronger EUR, up around 20% against the dollar after the German Chancellor’s Christian Democratic Party showed confidence in their ability to form a coalition government with the Social Democrats.

USDJPY seems to have reversed a dip back to 112.00 – 07 handles, while GBPUSD hovers above 1.31991 (open) post UK budget announcement this morning. The Sterling topped up around 0.1% against the greenback, ticking its highest gain in three weeks.

Crude Oil Data in the Pipeline

Crude oil data beat expectations, ticking higher than former 8 November peak, hitting a 2-year high in reaction to news about a Canadian pipeline disruption to US.

WTI crude went up by 1.9% to $57.88 a barrel (on the vertical scale), the highest level it hit in more than 2 years.

In Europe, Brent crude reached $63.24 a barrel (on the vertical scale).