USD declined severely after the reveal of policymakers’ worries for inflation indicated from the FOMC minutes and Trump’s political changes. That uncertainty for the greenback boosted the gold which rebounded strongly after reaching our suggested target at $1,274.
USD Lost All its Gains as Fed May Not Rise Rates
The U.S. dollar almost reversed all of its earlier week gains on Wednesday after the publication of the last meeting’s minutes that took place two weeks ago, July 25-26. The central bank had kept its fund rate unchanged at 1.25%, on inflation worries. Some policymakers expressed their expectations for the inflation to remain below Fed’s 2% target longer than initially forecasted, while some others suggested that Fed “could afford to be patient” with the next rate hike.
In addition, the minutes revealed that Fed was poised to begin reducing its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities. If inflation rate does not pick up in the next months, Fed may stand back for a third rate hike this year and keeps rates unchanged until next year.
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