A factor that contributed to the weakening of the dollar after the release of the FOMC minutes was the record of the discussion of falling inflation expectations. Members of the Committee drew attention to this factor twice and discussed deeply the cause of this turn of events:
Part of a more hawkish members tried to explain changes in the prices of inflation-protected bonds (securities shall reflect market inflation expectations) the low liquidity and other "special factors". So in a sense trying to ignore what carries overtones valuation of these securities:
Course, there was a reference to the improvement of the situation on the labor market, although some pigeons members drew attention to the fact that many of the newly employed, are employed on a casual and non-traditional full-time jobs:
At the end, some members suggested that for the time being "loosely" ideas predictions based on consensus forecasts in addition to the Committee, which was to improve the communication of the bank. This topic will be discussed at the next meeting of the FOMC.
In summary publication of the minutes at a slightly hawkish expectations after the meeting Minutes brought slightly surprising turn in the direction of reflection on inflation expectations (especially those markets). Hence, in the first moment the market reacted repricing of the dollar. However, the surprise was not significant enough to sell to investors began looking forward to its weakening dollar in the long run.
regards,
oscarjp
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