US Dollar Eases on FOMC Minutes

The minutes from the October FOMC meeting have seen most of the Fed members agree to the fact that the US economy was ready for rate hikes by December amidst diminishing risks to the global economy. On inflation, the Federal Reserve members were still not reasonably ‘confident’ on the inflation outlook. The minutes reiterated that the liftoff decision would be data dependent with the risks being finely balanced. While the US Dollar rallied into the release of the minutes, the Greenback took a pause as the commodities and most of the risk currencies managed to bounce back on profit-taking. The US S&P 500 Index took the news in its stride, closing on a bullish note at 2078 yesterday. Previously broken support at 2086 is likely to be tested sooner than later and established longer-term resistance at 2086 could potentially pose downside risks to the gains in the S&P 500.

The Bank of Japan met earlier today for its monthly monetary policy review with the annual rise in monetary base was left unchanged at 80 trillion Yen. The decision to leave the BoJ's quantitative and qualitative easing program unchanged comes after comments a few weeks back from BoJ official Harada noted that the Central bank was in no hurry to expand the monetary base to speed up inflation. The BoJ strongly believes that the current downturn in energy prices was to be blamed for lack of inflation rising, but remains optimistic that the 2.00% inflation target would be reached in 2016. The Bank of Japan has left monetary policy untouched for the most part this year despite most economists forecasting that the Japanese Central Bank would ease policy further and expand purchases. USDJPY was weak after yesterday’s FOMC minutes and this morning’s inaction from the BoJ has kept the Yen a bit stronger.