Are markets already looking for the day after the first rate hike? Or are we seeing an extension of the post Fed minutes dollar slide?
In any case, the greenback is falling across the board, with EUR/USD returning to the higher range.
The meeting minutes revealed what we already knew: Yellen and her colleagues wanted to send a hint that a rate hike is firmly on the table for December. They didn’t add any hawkishness nor contrast the notion with dovishness.
The dollar, that gained before the release, went down afterwards, but never went too far. We are now seeing an extension.
Or is it more than just an extension of previous positioning?
Yellen and also some of her associates at the Federal Reserve have been putting an emphasis on the gradual nature of rate hikes and have asked markets not too look at the timing of the first move.
Are markets listening? In this case, rates would still remain well under 2% by end 2016 and from there they wouldn’t rise that fast. And if this is the case, the dollar is less attractive.
EUR/USD is trading at 1.0753. The next significant resistance line is at 1.0830. Strong support awaits at 1.0630.
Also other currencies are beating the dollar with GBP/USD topping 1.53 and USD/JPY slipping below 123.
