EUR/USD extended its decline on Wednesday even though minutes for the Federal Reserve’s January meeting were noticeably dovish, making traders believe that it will take longer for the Fed to continue with its monetary tightening. Yet it is important to note that the minutes showed that the Committee was still showing willingness to continue monetary firming, albeit with slower pace. As for macroeconomic reports released from the United States over the Wednesday’s session, all of them were good with the exception of housing starts that were below expectations.
Housing starts were at the seasonally adjusted annual rate of 1.10 million in January, falling from the December’s rate of 1.14 million and missing the median analysts’ estimate of 1.16 million. Building permits were at the seasonally adjusted annual rate of 1.20 million, little changed from the December’s level and in line with forecasts. (Event A on the chart.)
PPI rose 0.1% in January, surprising specialists who were expecting the same 0.2% drop as in December. (Event B on the chart.)
Both industrial production and capacity utilization rate increased in January. Production was up 0.9 percent, compared to the predicted increase of 0.3 percent and the December’s revised drop by 0.7%. Capacity utilization rose from 77.4% to 77.1%, beating the consensus forecast of 76.7%. (Event C on the chart.)
FOMC released minutes of January meeting. The minutes were rather dovish, but said that “participants continued to expect that gradual adjustments in the stance of monetary policy would be appropriate,” though they also “emphasized that the timing and pace of adjustments will depend on future economic and financial market developments and their implications for the
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