- The minutes from the Federal Reserve’s meeting held on July 29th-30th will be released on Wednesday.
- Investors will closely analyze the discussions regarding the decision to keep the current policies unchanged.
- There’s a strong expectation in the market that the Fed might opt for a 25 basis point rate cut in September.
The US Federal Reserve will make public the minutes from its Monetary Policy Conference on July 29-30 at 6 PM GMT this Wednesday. The decision during this meeting was to maintain the policy rate within the 4.25%-4.5% range, although two officials, Christopher Waller and Michelle Bowman, were in favor of a quarter-point rate cut.
Jerome Powell and others decided to keep the policy settings unchanged during the July meeting
During the FOMC meeting in July, the Fed opted against altering interest rates. In their statement, the Fed noted that inflation is still experiencing a mild upward trend, while recent indicators have shown that economic growth has slowed in the first half of 2025.
Following the meeting, Fed Governor Waller expressed his dissent, suggesting that tariffs should be viewed as a one-time price issue that requires further examination while maintaining stable inflation expectations. Similarly, Governor Bowman pointed out that it might be wise to curb growth and consider a more neutral policy approach, especially given the current labor market dynamics. She believed it’s important to weigh risks associated with job delegation more heavily.
On another note, data released after the meeting painted a complex picture. Non-farm payrolls (NFP) grew by 73,000 in July, with revisions for May and June reflecting increases of 125,000 and 133,000, respectively. The Bureau of Labor Statistics also reported that annual inflation, as measured by the Consumer Price Index (CPI), stood at 2.7% in July. A bigger concern arises from the producer price index (PPI), which escalated from a 2.4% rise in June to 3.3% year-over-year.
When can we expect the FOMC minutes and their potential impact on the US dollar?
The FOMC minutes will be made available at 6 PM GMT on Wednesday.
According to the CME FedWatch tool, markets are predicting an 83% chance of a 25 basis point rate cut at the next meeting. Such positioning suggests that the US dollar (USD) might weaken against other currencies if the minutes reveal that policymakers are leaning towards easing rates in September. However, due to ongoing uncertainties regarding how tariffs will influence inflation, the USD might hold its ground if it’s highlighted that many Fed officials prefer to keep rates steady.
Still, it’s worth noting that the market reaction to the FOMC insights might not last long, as these discussions occurred before the most recent data on employment and inflation emerged. Investors may also be waiting to hear from Federal Reserve Chairman Jerome Powell at the Jackson Hole Symposium before making significant trades based on the Fed’s policy outlook.
Eren Sengezer, who leads the European Session Analysis at FXSTREET, provides a brief perspective on the USD index.
“The relative strength index (RSI) on the daily chart is just under 50, while the USD index is showing fluctuations around the 20-day and 50-day simple moving averages, signaling a neutral stance for the time being.
“On a positive note, the 100-day SMA stands as a crucial resistance point around 99.00, followed by potential challenges at the 99.80-100.00 range (downtrend from January to July’s 23.6% retracement) and 101.65 (Fibonacci 38.2% retracement), with 99.00 also being a key static resistance level against the backdrop of a downtrend and the 95.50 midpoint.”
