The minutes from the June 14-15th FOMC meeting were released Wednesday and seem to have had a slight stabilizing effect on Thursday’s market performances.
Equities closed higher on Wall Street Wednesday and this has helped a positive European open. Sterling has rallied slightly today and in the past few days, there has tended to be more of a negative correlation between sterling and the FTSE 100.
In Forex trading there is some pressure for the dollar today. The rebound in sterling is being accompanied by yen strength which questions the sustainability of the sterling rally. The euro is slightly weaker while the Aussie dollar is an underperformer after ratings agency S&P put Australia’s AAA credit rating on negative watch. Gold is mildly higher, as is the oil price.
FOMC Minutes
The Fed meeting took place before the June 23rd Brexit vote and the released minutes reflect the reasons for the decision to keep interest rates steady for the time being. According to the minutes, the “Brexit vote could generate financial market turbulence that could adversely affect domestic economic performance.”
Almost all the participants in the FOMC meeting judged that the surprisingly weak May employment figures increased their concern for the outcome of the labor market but they were reluctant to change their outlook materially based on only one economic report. The severe slowdown in hiring by U.S. employers was cited as one reason for leaving interest rates steady last month.
Most members agreed that before evaluating whether another step in removing monetary accommodation was warranted, it was prudent to wait for additional data on the consequences of the U.K. vote.