Fed members disunited

The report of the previous Fed meeting on monetary policy shows a serious disunity amongst the members of the Monetary Policy Committee about the rise in interest rates.
Details of the summit, on which FED voted to raise interest rates indicated that several members of the committee asked the balance of reserve bonds to start declining by the end of August. Others, however, have said that this is more appropriate to be done later this year.
And while most of the FOMC members believe that the observed slowdown in price increase is a temporary phenomenon and a consequence of seasonal and casual factors, some have expressed concern if this is not the beginning of a new trend.
Fed members also seem to be worried why the recent rise in interest rates has not led to a contraction in money supply, and why financial markets have continued to grow.

SEB: What to do with EUR/USD in two hours?

Currency strategist at the SEB carefully studied the history of the behavior of EUR/USD in the first day after the publication of the minutes from the FOMC meeting and recommend to do the following:
- Keep track of the dynamics of the couple in the first three hours after the event. If at that time EUR/USD is trading higher than the day before publication, buy and hold position one day;
- If EUR/USD is trading lower than the day before publication, sell and also hold the position just one day.
In the bank noted that the in period since 2010, this system has generated 84 signals, 52 of which (62%) worked in plus and brought an average gain of 0.5%. The average loss for the rest of the signals is 0.4%. Maximum profit is 1.6% and the maximum loss - 1.4%, analysts say.

RBS: We did not expected raise rates by the Fed this year before, we do not expect it now

The published report from the meeting of the FOMC in July turned out to be less combative than market expectations. Committee members were divided on the need to continue raising interest rates. However, we should keep in mind, that the head of the Fed, Janet Yellen, is one of the most "pacifist" members of the FOMC.
Thus analysts of the bank remain of the view, that the Fed has no reason to hurry to increase interest rates and this move looks very unlikely in September.
Although recent US economic data are very encouraging, obstacle to continued tightening of monetary policy is the lack of sustained inflation. The increase in interest rates in December is still possible, but analysts of the bank are skeptical that it will happen even then.

Fed's minutes did not brought new ideas

The reports, published yesterday from the June's meeting of the Fed did not brought new ideas on the market. The general conclusion is the following - the uncertainty after the British referendum is maintained, failing data on the labor market in the last month are likely to be a single event, but the attention to statistics in the coming months will be very significant.
Tomorrow will be published labor market data for June, and, according to the consensus forecast, the statistics will be released in a moderately positive manner. Consensus at the moment suggests that there have been generated about 175 thousand new jobs in June, the unemployment rate during this period increased from 4.7% to 4.8% (which is not a problem, after an unexpected decline by 0.2% last month), dynamics wages remained at the level of the previous reporting period. Such statistics would be an evidence that the US economy is relatively healthy, and the labor market is feeling ok.
Tomorrow's statistics will be important for the US dollar in the currency market. The dollar index significantly added value after the publication of results of the referendum, and then within a few days demonstrates consolidation. If the labor market statistics will be positive, the dollar index may try to form another boost up, and the breakthrough of local maximums at 96.90-97 area may give a signal for growth to 98-98.50 area.

Fed's protocols pushed the dollar to a three-week peak

The dollar rose to its highest level in three weeks against the euro after the protocols of the last meeting of the Federal Reserve were released. Against the yen the dollar rose also to a three-week peak, reaching 110 yen.

The Fed will probably raise interest rates in June if economic data show steady growth in the second quarter, while inflation and employment continue to improve. Futures on federal funds, based on FedWatch determined that the likelihood of an increase in interest rates in June was 34%. Prior to the publication of protocols probability was 19%. The possibility of raising interest rates in September rose from 57% to 68% and for December - from 74 to 80%.

The euro lost 0.8 percent to 1.1220 - the lowest level since April 25. It was the strongest decrease of the single currency in percentage over the past five weeks. The US currency rose against the yen by about one percent, reaching 110.23.

The Swiss franc fell 0.66 percent to 0.9866.

The dollar index, which measures the change in the dollar against six major currencies reached a 5-week high, rising to 95.198.