And once again it was a trading day without huge market moves and there were no significant break-outs. The cable marked a new resistance at 1.5370, but generally followed its recent upward trend. The euro, on the other hand, remained firmly within its narrow trading range. Nevertheless, traders were able to gain a small profit with our long-entry, even though gains were not as huge as we had hoped for.
Why did the minutes fail to trigger bigger moves?
The Bank of England’s MPC minutes came in less hawkish than expected. BoE policy makers voted 8-1 to keep the benchmark rate at 0.5 percent and signaled to keep rates steady as long as inflation weakness persists. According to the minutes, price growth will probably stay below 1 percent until spring 2016, which is longer than anticipated. Investors had hoped for any signals with regard to an earlier rate hike.
The overall tone of the FOMC minutes was not sufficient enough to spur the U.S. dollar’s momentum. Federal Reserve policy makers delayed an interest rate increase last month because of downside risks to inflation and a further strengthening of the dollar, which could be caused by growing risks from China. However, officials continued to say that they were on track to raise rates later this year. Projections showed that 13 of 17 FOMC members forecast a rate hike by year’s end. Market participants anticipated a more hawkish tone and given the recent slack in the labor market, investors saw little reason in the minutes to expect a Fed rate hike soon.
Today there are no important economic reports scheduled for release. U.K. Trade Balance, scheduled for release at 8:30 GMT and U.S. Wholesale Trade Sales, due at 14:00 GMT are second-tier reports, which could have a limited impact on the currencies.
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