Global FX Market Summary: EUR, Fed Minutes February 21, 2024

Dmitry Chernovolov Market Analyst

Hawkish Fed minutes could strengthen USD, dovish BoE hints could boost euro, mixed economic data leaves impact unclear, FOMC minutes release today holds the most weight.

Hawkish Fed Minutes Awaited: Investors are eagerly awaiting the release of the FOMC minutes today, hoping for clues about the timing of the first potential rate cut by the Federal Reserve. Markets currently expect this cut to occur in May. Hawkish commentary from the Fed could strengthen the US dollar and put downward pressure on EUR/USD.

Dovish BoE Hints at Earlier Rate Cuts: Bank of England Governor Andrew Bailey’s recent comments suggesting rate cuts could happen before inflation reaches the target of 2% have raised speculation of an earlier easing of monetary policy in the UK. This could weaken the Pound Sterling and potentially support EUR/USD.

Mixed Economic Data: Recent economic data has been mixed, with some positive GDP figures from Denmark and declining negotiated wage growth in the Euro Area suggesting less pressure on central banks to tighten policy. However, weaker Japanese export volumes indicate a slow start to the year for the country’s economy. The overall impact on EUR/USD is uncertain and will likely depend on the interpretation of the FOMC minutes.


Upcoming Economic Events:

Today (February 21st):

  • 19:00:00 FOMC Minutes (USD):Crucial release outlining Federal Reserve policy decisions and economic outlook. Hawkish commentary could strengthen USD and weaken EUR/USD.

Tomorrow (February 22nd):

  • 08:30:00 HCOB Composite PMI (EUR):Key indicator of Eurozone economic health, potentially impacting EUR/USD.
  • 09:00:00 Consumer Price Index (YoY) (EUR):Inflation data influencing ECB policy expectations and potentially affecting EUR/USD.
  • 09:30:00 S&P Global/CIPS Composite PMI (GBP):Leading UK economic indicator, impacting GBP and potentially affecting EUR/USD through cross-currency relationships.
  • 14:45:00 S&P Global Composite PMI (USD):US economic indicator impacting USD and potentially affecting EUR/USD.

 

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