The hawkish tone of the June meeting minutes released by the Federal Reserve was in line with expectations, and there were no unexpected clues. The US dollar index remained strong after the minutes were released. Technically, the U.S. dollar index broke through the rising wedge this week, and the rally began to accelerate, and it may continue to refresh to new highs in nearly 20 years.
Summary of the minutes of the Fed’s June meeting:
George was the only member at the June meeting who did not support a 75bps rate hike. Participants at the June policy meeting agreed with the view that the inflation outlook has deteriorated, so a 75bps rate hike is warranted. Fed officials see a rate hike at the July FOMC meeting. 50 bps or 75 bps Fed sees ‘more restrictive’ interest rate levels possible if inflation persists Fed officials ‘highly concerned’ about inflation risks Most participants see downside risks to growth, including the Fed Rate hikes could have a “more than expected” impact Fed officials expect growth to rebound in the second quarter Participants see little evidence so far that supply constraints have eased enough to help rein in inflation Many participants see risks entrenched in inflation Participants believe high inflation could become entrenched if the public questions the Fed’s resolve. Fed officials believe it may take a while to bring inflation down to 2%
Market reaction after the release of the minutes of the Fed’s June meeting
Since the hawkish rate hike stance shown by the Fed’s June meeting minutes is already well known, and there are no additional clues to exceed expectations, it did not cause much market volatility. The U.S. dollar index traded at an intraday high, also near a 20-year high of 107. U.S. stocks edged higher after the minutes were released, which may have helped the S&P 500 record a three-day winning streak. Oil prices also continued to rebound after the meeting minutes were released, and gold prices rebounded slightly.
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US dollar index trend technical analysis
The daily chart shows that the U.S. dollar index broke out of a high rising wedge on Tuesday, which would trigger an acceleration in the upside. After the index stands at 107, it may move towards 108, 109 and 110 one after another. If it falls, pay attention to the support near 106.40 on the upper side of the wedge. If it falls below this support, it should be alert to the risk of further downward adjustment.
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