FOMC Minutes Boost US Dollar

EUR/USD dropped today after the Federal Reserve released the minutes of its July policy meeting. The minutes actually did not reveal anything new, but the dollar jumped nevertheless. It looks like the US central bank is going to tamper down its asset purchases and traders buy the dollar because of this even though the date for such move is not predetermined. Yet even sharper decline followed the rally and the US currency may yet lose its gains.
Existing home sales jumped to the seasonally adjusted annual rate of 5.39 million in July from the downwardly revised 5.06 million in June, exceeding the forecast of 5.15 million. (Event A on the chart.)
Crude oil inventories decreased by 1.4 million barrels last week (in line with forecasts) and are near the upper limit of the average range for this time of year. The stockpiles fell by 2.8 million in the week before. Total motor gasoline inventories decreased by 4.0 million barrels and are in the upper half of the average range. (Event B on the chart.)

FOMC minutes were the major economic release this week. In fact, the minutes did not say anything particularly new. The Committee confirmed that it plans to slow the pace of asset purchases later this year, but explained that such move will depend on the state of the economy and is not scheduled on some preset date. FOMC also reminded that reduction of purchases does not mean an end to accommodative policy. (Event C on the chart.)

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