EUR/USD Jittery After FOMC Minutes

The Federal Open Market Committee released minutes of its latest monetary policy meeting. As it could be expected, the release resulted in volatility on the Forex market. EUR/USD jumped after the event but backed off almost immediately. The minutes looked hawkish for the most part, showing the monetary tightening next month is probable.
Housing starts were at the seasonally adjusted rate of 1.06 million in October, trailing market expectations of 1.16 million and below the September’s level of 1.19 million. Building permits were at the seasonally adjusted rate of 1.15 million, matching traders’ expectations exactly, up from 1.11 million in the preceding month. (Event A on the chart.)
Crude oil inventories rose just a bit by 0.3 million barrels last week. The gain was far smaller than the predicted 2.0 million and the previous week’s increase of 4.2 million. Total motor gasoline inventories were up by 1.0 million barrels and were well above the upper limit of the average range. (Event B on the chart.)

FOMC minutes showed that many US policy makers believed that a December interest rate hike is likely. (Event C on the chart.) The notes said:

Some participants thought that the conditions for beginning the policy normalization process had already been met. Most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting.

On Monday, a report about NY Empire State Index was released, showing a reading of -10.7 in November, indicating the fourth consecutive monthly decline of business activity. That is compared to the October figure of -11.4 and the predicted number of -5.3. (Not shown on the chart.)
Yesterday, several reports were released. (Not shown on the chart.)
CPI rose 0.2% in October on a seasonally adjusted basis, in line with expectations, after falling at the same rate in the prior month.
Industrial production declined 0.2% in October, the same as in September, instead of rising 0.1% as had been predicted by forecasters. Capacity utilization was at 77.5% last month, matching analysts’ forecasts exactly. Initially, the September’s rate had been estimated to be at the same level but has been revised up to 77.7% later.
Net foreign purchases were at $33.6 billion in September, up from $20.8 billion in August.

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