Muted Dollar Reaction to FOMC Minutes — Yen Weakens, Oil Extends Gains

It’s a surprisingly calm day on the macro front, with the calendar unusually empty — quite a rare occurrence for a Thursday. The only notable event scheduled for today is a speech from Jerome Powell, which could still stir some volatility later in the day. But aside from that, we’re looking at a light data session, giving traders time to digest the movements and news from earlier in the week.

Yesterday evening brought the release of the FOMC meeting minutes, which, interestingly, failed to spark any significant volatility on the American dollar. Typically, minutes from the Federal Reserve’s meetings trigger sharper reactions — quick spikes in the dollar or bond yields — but this time, markets barely blinked. The U.S. dollar weakened slightly after the release, but the move was muted and short-lived. The minutes revealed that most Fed officials were strongly inclined to lower interest rates during the September meeting, though opinions differed on how many cuts might be appropriate in the near term. Overall, it was a confirmation of the dovish shift in tone, but one that traders had already priced in, hence the lack of drama on the charts.

If you look at pairs like USD/JPY or EUR/USD, it’s almost impossible to spot where the FOMC minutes were released — a clear sign of just how little impact they had. This subdued reaction stands in contrast to the normally lively Wednesday evenings when such documents often shake markets.

Now, focusing on the currency market, the early European session brings us some interesting dynamics. The Japanese yen is weakening sharply, continuing the move from late Wednesday, while the British pound is also under pressure, extending its recent slide. On the flip side, the strongest currencies this morning are the Swiss franc, the Canadian dollar, the U.S. dollar, and the Australian dollar, all showing steady gains against their peers. The dollar’s resilience, despite the dovish Fed tone, remains one of the week’s defining themes.

Turning to commodities, oil continues its slow but steady push higher. We’re now in the fifth consecutive day of a bullish reversal, but as of now, the move lacks real momentum. Volatility remains low, and while the direction is positive, traders seem cautious, waiting for stronger confirmation before fully committing to the bullish side. Meanwhile, metals are trading relatively flat, consolidating after earlier gains.

Finally, looking at indices, yesterday’s strong performance on major equity markets has set a positive tone. Futures heading into the European session are flashing green, suggesting that investors are ready to extend the rally. The sentiment across indices remains upbeat, supported by optimism around the Fed’s dovish stance and generally improving risk appetite.

So, while Thursday’s calendar may look quiet, the markets are far from boring. With currencies diverging, oil extending its recovery, and equities maintaining bullish momentum, traders still have plenty to watch — even without major data releases.

Source: https://www.axiory.com/analytics/market-news/muted-dollar-reaction-to-fomc-minutes-yen-weakens