The US dollar was subdued throughout the day yesterday, with markets tentative ahead of the minutes from the latest US Federal Reserve meeting in January. Data in the afternoon was underwhelming, with figures missing (i.e. building permits) or just reaching expectations (i.e. producers price index). The minutes from the last Federal Reserve meeting were key to US economic policy as exiting Chairman Ben Bernanke’s final meeting gave way to a second round of tapering, so investors were keen to hear the general consensus around this. Overnight, the minutes showed that all members voted to keep interest rates on hold although there was comment that they may reduce the target for unemployment from 6.5% as a key trigger for increasing interest rates.
Today’s reaction to the minutes will be supplemented by a number of data releases. Firstly is inflation data from the core Consumer Price Index, alongside the ever-important unemployment claims. Manufacturing Index figures from the Philadelphia Federal Reserve will be released later in the afternoon, and supported by the less influential Flash Manufacturing Purchasing Managers’ Index, as well as mortgage figures.
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