The currency pair traded with a small upward bias during the whole trading session and also reacted positively to the oil inventories report, but the real growth started immediately following the FOMC minutes release today.
US wholesale inventories rose in line with the forecasts in February — by 0.5%. January inventories growth was revised from 0.6% to 0.8%. (Event C on the chart.)
Crude oil inventories unexpectedly increased by 4 million barrels during last week. The growth followed a decline of 2.4 million barrels a week earlier. It was the first positive change in 10 weeks. At the same time, total motor gasoline inventories decreased by 5.2 million barrels last week, following 1.6 million barrels decline reported earlier. They are now well below the lower limit of the average range. (Event B on the chart.)
FOMC minutes for the March meeting showed that the markets have probably overstated the readiness of the Fed to raise rates soon (event C on the chart):
However, several participants noted that the increase in the median projection overstated the shift in the projections. In addition, a number of participants observed that an upward shift was arguably warranted by the improvement in participants’ outlooks for the labor market since December and therefore need not be viewed as signifying a less accommodative reaction function. Most participants favored providing an explicit indication in the statement that the new forward guidance, taken as a whole, did not imply a change in the Committee’s policy intentions, on the grounds that such an indication could help forestall misinterpretation of the new forward guidance.
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