FOMC Minutes Hint on Rate Hike Delays
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FOMC Minutes Hint on Rate Hike Delays
There have been rumours for the last six months, and contrary to forecasts of optimistic investors, that the Federal Reserve (Fed) would not be in a rush to carry on with an interest rate hike. So the release of the Federal Open Market Committee (FOMC) meeting minutes last Wednesday only boosted those rumours. The FOMC minutes report was quite clear on passing on the message that an interest rate increase would be delayed until the later parts of 2015 as U.S. policymakers believe that slow wage growth together with deteriorating international developments have negative contributions. The dovish comments by the FOMC weighed on the U.S. dollar while precious metals took a breather from previous days’ losses.
Even though the bullish U.S. dollar trend took a knock following the release of the FOMC data on Wednesday, there might not be enough evidence to suggest that the USD softness will continue for an extended period of time. Yes, the FOMC minutes published that an interest rate hike is not likely to happen within the following months, but left the possibility open of that happening during the last six months of this year.
“The release of the FOMC meeting minutes last Wednesday only boosted those rumours”
The release of the dovish FOMC minutes allowed gold to post some gains on Wednesday. The shiny yellow metal ended Wednesday’s trading session at $1,212.08 per ounce, after slipping as low as $1,197 per ounce on the previous day to a five week low. Gold ended the trading week with a 2.2% loss. Silver’s price also advanced at some point on Wednesday from $16.24 per ounce to as high as $16.58 per ounce.
Crude oil markets were quite volatile on Wednesday on speculations that U.S. Crude Oil Stock would be higher than expected. Data for the previous two weeks were showing that U.S. Crude Oil inventories were significantly higher than expectations and fuelled concerns that crude oil supply in the markets is far more than the demand. Added to that is the fact that output from Russia and Saudi Arabia is increasing, and it now feels like that any piece of information released on crude oil oversupply could move the oil markets, and with force. The West Texas Intermediate (WTI), also known as Texas light sweet, posted losses of almost $3 as it declined by 5.33% from $53.18 per barrel to $50.49 per barrel.
It is quite obvious that crude oil’s popularity within the investor world has severely deteriorated during the last few weeks as it lost half of its price within two months or so. And even though there are some forecasts that crude oil’s price is oversold, the fact that oil prices managed to recover by 18% is quite surprising if we consider that the gap between supply and demand is growing even bigger with time.
As the ongoing negotiations between Greece and its European creditors over possible changes to its existing loan terms are not showing signs of a possible agreement but rather increase the risk of Greece’s exit (Grexit) from the euro, the upcoming Consumer Price Index (CPI) data, expected for release on Tuesday 24 February at 10:00 GMT, for Eurozone might provide additional information on the Eurozone’s economical health and not just whether it will crumble or not.
by Senior Analyst at easy-forex
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