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Forex & Equities: Dollar Index Hints at Hawkish FOMC Minutes

Posted by Akhilesh Ganti on Aug 19, 2014 11:02:00 PM

The first event risk of the week is due out a bit later in the US session when the minutes of the FOMC's July meeting will be released. Analysts are anticipating that there might be a hawkish tone to the missive even though the actual policy announcement was largely as expected. What is more important to traders is whether there was a debate prior to the announcement and, if so, how vigorous was it. Markets will be looking for subtle nuances in the wording of the statement to gauge whether FED member Plosser was acting alone in dissenting or if there are more on the committee who are leaning towards the hawkish camp.

FED Chair Yellen has been quite vocal about the need to maintain the status quo as long as certain key metrics, like wage growth, continue to underperform which would put her in the dovish camp. Plosser's dissent might intimate that there are those who might be getting a bit anxious that the FED will end up behind the curve given that data appears to show an economy gaining momentum.

{WWM's New ALPHA Trader - WEEKLY chart [Dollar Index]

DollarIndex 081914 w

The US Dollar Index, which has breached the pivotal 81.49 level on a weekly basis after carving out a basing pattern, is trading within an ascending parallel channel and appears poised to target moderate resistance at 82.71 on a multi-week timeframe. Whether this does indeed come to fruition depends a lot on the state of the US economy as viewed by the members of the FOMC. 

Ranges:{WWM's New ALPHA Trader - DAILY charts [EUR, GBP, AUD, YEN, GOLD, OIL, DXY]}(click to enlarge)

FX 082014

Equities:{WWM's New ALPHA Trader - DAILY charts [Dow30, SP500, Nasdaq100, Nikkei225, China, HKG40, Nifty50, ASX200]}(click to enlarge)

STOCKS 082014

Topics: Asian session, Ranges


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