Euro surges as traders ignore Fed’s hawkish minutes
The shared currency gained over 0.85% during the North American session on Wednesday, even though the latest Federal Reserve minutes had a “hawkish” tone, with some participants, along with the three dissenters, suggesting that raising rates could be necessary if the disinflation process stalls.
The euro gained over 0.85% in the North American session on Wednesday, despite the Federal Reserve's "hawkish" minutes. The EUR/USD traded at 1.1673. Some Fed participants suggested raising rates if the disinflation process stalls, despite the broad-based inflation. The three dissenters acknowledged the inflation's broad base. The Fed Chair, Kevin Warsh, questioned whether the Fed should hold only six monetary policy meetings, allowing two months of full data.
The US Treasury buyback of long-end bonds showed elevated yields, while the Eurozone HICP rose to 2.9% in July, matching forecasts. The ECB is expected to raise rates by 25 basis points on September 10. Traders priced an 88% chance of a rate hike in the money market. The US economic docket features Initial Jobless Claims, St. Louis Fed President Alberto Musalem's speech, and S&P Global Flash PMIs.
In Europe, traders will watch Germany's PPI, Trade Balance, and ECB members' speeches. EUR/USD is bullish near-term, with the next resistance at 1.1849 and support at 1.1678 and 1.1459.
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