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Dollar gains from FOMC minutes may be short-lived

Published 23/05/2024, 05:56 pm
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Investing.com -- On Wednesday, the release of the Federal Open Market Committee (FOMC) minutes from the 1 May meeting indicated a more hawkish stance than anticipated, providing a temporary boost to the US dollar. The minutes revealed that while the policy was deemed "well positioned," there was an openness among many members to implement additional rate hikes if necessary. Furthermore, there was a debate among "many" participants on whether the current policy was restrictive enough to address economic concerns.

The hawkish tone of the minutes comes in the context of high inflation rates and a strong job market reported in March. Despite more positive data in April, some FOMC members, including Neel Kashkari and Chris Waller, have expressed ongoing worries regarding inflation. However, the overall sentiment of the FOMC may have shifted to be less hawkish since the May meeting.

Today, the strength of the dollar is under scrutiny as new economic data, including Purchasing Managers' Indexes (PMIs) from both the US and the eurozone, are set to be released. The eurozone's PMI figures are expected to potentially offer a more positive outlook compared to those of the US. Additionally, Nvidia (NASDAQ:NVDA)'s robust earnings report, released after the close of yesterday's market, could contribute to an improved risk sentiment.

The US economic calendar for today also includes new home sales, the Kansas City Fed Manufacturing Activity survey, and jobless claims data. The Dollar Index (DXY) faces challenges in maintaining its position above the 105.0 mark, though a gradual appreciation of the dollar leading up to the 31 May US Personal Consumption Expenditures (PCE) release has not been ruled out.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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