Global macro overview for 05/01/2017:
The Federal Open Market Committee (FOMC) Meeting Minutes were released yesterday and they offered some interesting insights regarding further FED monetary policy as we are heading into an uncertain year. As we remember, the central bank raised interest rates from 0.50% to 0.75% and signaled an intention to do so again three times in 2017. The minutes indicate, that almost all officials saw upside risks to growth on expectations that fiscal policies will be more expansionary under Trump and about half of policymakers incorporated those assumptions into forecasts. Many saw the higher chance of a faster rate hike pace due to a bigger risk of sizeable undershooting of longer-run normal unemployment rate leading to higher inflation, which will be closely monitored. Moreover, almost all members saw unemployment rate running below longer-term normal level. In conclusion, the hawkish tone is clearly dominating in the minutes despite some policy members concerns regarding US growth under Trump presidency. Nevertheless, the interest rate hikes will be continued in 2017 and the bullish trend in the US Dollar has very strong fundamental reasons.
Let's now take a look at the US Dollar index technical picture at the daily time frame after FOMC Meeting Minutes were released. We can see another test of the 61%Fibo level, but this time from the upside and the current daily candle has a rather long shadow already. If this candle will close above its open, then it might be considered as a bullish pressure to the upside. All in all it would suggest another rally possibility towards the recent swing high at the level of 103.83 and even a possible break out higher.
