By Adrian Robles, Today the FXCM USDollar Index (Ticker: USDollar ) rallied after therelease of the Minutes from the June FOMC meeting. The Minutesreiterated the information that was given in the FOMC’sstatement and Fed Chairman Ben Bernanke’s press conference onJune 20 th . The statement and thespeech outlined that the Fed would be holding interest rates at0.25 percent, and announced the extension Operation Twist. Theevent shattered some trader’s hopes for a more likely pathtowards a third round of the Quantitative Easing.
- Chart Created By Adrian Robles, GMT 5 min created in MarketScope
- The US Dollar Index rallied 30 points following the release of the FOMC Minutes. The price action following this event risk came at some surprise given that the Minutes did not offer any new information. This suggests the market was expecting further progress towards the acceptance towards and implementation of additional stimulus. The pop in the US Dollar suggests that traders are currently more concerned about the stability of the currency than the economic growth of the underlining country. As such the market is likely to have a risk aversion atmosphere until a policy authority announces further accommodation or data show a significant recovery.