EUR/USD Unable to Maintain Gains After FOMC Minutes

EUR/USD logged a surge after the Federal Open Market Committee released minutes of its latest policy meeting. The rally was short-lived, and now the currency pair trades not far from the opening level. While some members of the Committee discussed possibility of reducing monetary accommodation early, markets did not consider the minutes particularly hawkish, leading to disappointment of dollar bulls and weakening of the dollar. Yet the weakness did not last long, and the dollar pared losses versus the euro and other major currencies.
US crude oil inventories fell 2.5 million barrels last week, though remained at historically high levels for this time of year. That is compared to the forecast increase by 0.3 million and the previous week’s rise by 1.1 million. Total motor gasoline inventories dropped 2.7 million barrels but remained well above the upper limit of the average range. (Event A on the chart.)
FOMC released minutes of its July meeting. (Event B on the chart.) Of a particular note was the discussion about possible timing of another interest rate hike:

Members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity. A couple of members preferred also to wait for more evidence that inflation would rise to 2 percent on a sustained basis. Some other members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation. One member preferred to raise the target range for the federal funds rate at the current meeting, citing the easing of financial conditions since the U.K. referendum, the return to trend economic growth, solid job growth, and inflation moving toward 2 percent.

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