The minutes of the most recent U.S. Federal Reserve meeting released yesterday revealed that several members are questioning the reason behind the current low level of inflation. Some are even considering the possibility that it could remain below the 2% threshold for an extended period. The other important element that came out was that the meeting on September 20 could be the time to announce the start of the process to lighten the Fed’s balance sheet. In short, there is nothing in this context to believe a rate hike is in the cards in September, making such a decision in December dependent on upcoming economic indicators.
As a result, the greenback, which was already under pressure due to rallying precious metal prices, increased its losses. Curiously, however, despite a major decrease in U.S. Crude Oil Inventories, the price of crude oil fell below the $47 mark yesterday.
This morning, the USD is stronger as we go to press and we are awaiting the summary of the most recent European Central Bank (ECB) meeting. As was the case with the Fed, we’ll be looking to see whether the ECB is concerned about low inflation levels and whether the strength of the euro will be an obstacle to tightening monetary conditions.
Stéphane Goulet
Range of the day: 1.2575 – 1.2670