Matthew Weller | Feb 18, 2015 11:20AM ET
After a slow start to the week, at least when it comes to US data, volatility is poised to pick up on the third trading day of the week. Already today, traders have seen the latest data on the US housing market (Building Permits missed expectations, while Housing Starts came out in-line) and inflation (PPI showed a decline of -0.8% m/m vs. estimates of a -0.4% drop, while Core PPI also missed at -0.1% vs. +0.1% eyed), but the true marquee event will be the release of the minutes from the FOMC’s January meeting.
As a reminder, the Federal Reserve’s January statement came off as essentially unchanged, with a small nod to the improving labor markets countered by increasing concern about “international developments” (see near-perfect US NFP report earlier this month. Therefore, the data-dependent views of the Federal Reserve presidents may have also evolved over the last few weeks; in other words, there is a risk that the market will view today’s FOMC minutes as a bit “stale,” regardless of what they say. That said, there are still a couple of factors that traders will be looking for clarity on:
Considering all these factors, today’s FOMC minutes may lend support to the dollar. Unless the minutes show that the committee was far more dovish than the headline statement, traders could adopt the view that the strong jobs report ameliorates the central bank’s near-term concerns. If the market indeed takes this perspective, King Dollar could extend its dominion and continue to attract new subjects.
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