Date: 22 May 2019

Traders and investors are on high alert for the release of the meeting minutes from the last Federal Open Market Committee policy decision later this evening. The FOMC meeting minutes are widely tipped to show that U.S policymakers are set to leave interest rate on hold for the foreseeable future, as they continue to adopt a neutral monetary policy stance.

More interesting, the FOMC meeting minutes will not reflect the recent heightening of trade tensions between the United States and Chinese, as much has come to pass since the last Federal Reserve policy meeting. With this is mind, the market reaction to the FOMC meeting minutes may be muted at best, considering the impacts that the latest round of trade tariffs may have on the American economy.

Stronger than expected U.S GDP and U.S corporate earnings during the first quarter of 2019 have helped to steer the FOMC away from cutting interest rates. The main concerns for investors will be the repercussions for the global and United States economy during the second quarter of 2019 from the worsening trade war between the U.S and China and persistently weak inflationary pressures.

Federal Reserve Chair Jerome Powell gave his first scheduled speech since the announcement of new trade tariffs on Monday, with the FED Chair steering clear of mentioning the negative impacts to the U.S economy from the worsening trade war. Instead, Chair Powell choose to focus on the worrying rise in business debt inside the United States economy.

Atlanta Federal Reserve Chair Raphael Bostic further eased worries of an impending rate cut, when he commented earlier this week that he does not see the FOMC cutting the U.S interest rate this year. The fears coming from the U.S bond market are currently saying the opposite, with the Trump administration also calling for a rate cut, pressure may soon start to build on U.S policymakers to act.

 

 USD/JPY Daily Mountain Chart | Source: ActivTrader

USD/JPY Daily Mountain Chart | Source: ActivTrader

 

The USD/JPY pair has staged a solid technical recovery this week towards the 110.60 level as the risk-sensitive pair take a pause from its recent downtrend. Sellers will need to move the USD/JPY pair below the 109.80 to trigger additional technical weakness towards the 109.00 support level. Further gains above the 110.60 level may see the USD/JPY pair testing towards the important 110.90 level and possibly the 111.30 resistance level.

 

Written by Nathan Batchelor, External Analyst, ActivTrades

*The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and as such is to be considered to be a marketing communication. All information has been prepared by ActivTrades PLC (“AT”). The information does not contain a record of AT’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not a reliable indicator of futures performance. AT provides an execution-only service. Consequently, any person acting on the information provided.