Daily Market Update

Dollar Flat Ahead of Fed Minutes; Johnson in Berlin

August 21, 2019

The U.S. dollar held tight ranges overnight but the greenback remains near its highest levels of 2019.


The main event today will be the release of meeting minutes from the last Federal Reserve decision.  Much has happened since that last meeting but are a few things we will be watching out for, especially since this was the first rate cut in a decade. First, we will be looking a change in wording and a potential change in the “will act as appropriate” policy guidance.  Other analysts have suggested the Federal Reserve could replace the phrase “closely monitor” with “continue to monitor.”  Splitting hairs? You bet.  We will also be looking into the level of disagreement between Fed policy makers for clues on their thinking moving into the next year.  Markets are pricing in an additional 50-75 basis point cuts this year to stave off the ill effects of the trade war in the face of a possible recession.

While today’s meetings release has the potential to make waves, it is likely that market participants will quickly shift their focus to Fed Chairman Jay Powell’s speech on Friday. As mentioned earlier, much has changed globally and with the trade war since the last meeting, so Powell’s remarks Friday might hold more weight.

Later this morning, existing home sales are expected to show a rebound of 2.5% in July, up from a contraction of 1.7% in June.


What to Watch Today…

  • Fed Meeting Minutes at 2pm
Complete Economic Calendar can be found here.



EUR/USD held a 10 basis point range last night as the sleepy August ranges persist.  The currency pair all but shrugged off the news that the Italian government collapsed yesterday.  Italian Prime Minister Conte announced he would tender his resignation after calls for a no-confidence vote from a once ally within his coalition.  The move by Conte had a calming effect on markets as President Mattarella attempts to form a new administration.  It is our view, however, that a new election might be in the cards later this year or early next.


The British pound came under pressure overnight before recouping some of its losses.  U.K. Prime Minister Boris Johnson is set to meet with German Chancellor Angela Merkel this afternoon in Berlin.  Johnson will attempt to restart Brexit negotiations but the sticking point will remain the so-called Irish backstop that the EU has said is non-negotiable. Optimists believe there is perhaps a ray of hope the two will make significant progress, but this analyst is not holding his breath.

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