FOMC participants, while recognizing the downside risk posed by trade tensions, noted the recent strength in economic growth and expressed confidence in the economic outlook. Participants noted that inflation is holding near 2% and saw the risks to the outlook as generally balanced. With respect to the impact of tariffs, members noted the offsetting effects of higher tariffs and lower agriculture prices. To this we might add the continued strength of the USD. With forecasts for ongoing steady growth being met, participants generally expected that further gradual increases in the target range for the federal funds rate would be consistent with a sustained expansion of economic activity. As in past meetings, participants debated the implications of a flattening yield curve, with some members cautioning that an inverted yield curve tended to precede recessions. Others warned against inferring causation, noting the myriad global forces weighing on term premiums that may be distorting the signal.
In currencies, the EUR/USD fell to 1.1550 in Asia, having faced rejection at the trendline sloping downwards from the April 19 high and July 31 high. The Fed minutes released yesterday showed the policy makers are poised to continue gradually raising interest rates. The GBP/USD pair advanced to a fresh weekly high of 1.2935, with the GBP underpinned by Brexit-related news, as EU Chief Negotiator Barnier and UK Brexit Secretary Raab agreed to hold non-stop Brexit negotiations and pledged to reach a deal.
In commodities, Gold lost momentum as fears of another round of U.S. tariffs on China and expectations of higher interest rates lifted the USD. Regarding Oil, it rose 2.98% against the USD, after the Energy Information Administration (EIA) report indicated that US crude oil stockpiles declined by 5.8 million barrels to 408.4 million in the week ended 17 August.
For today there are no high impact news in the economic calendar.