Euro And Sterling Have Tailwind After Fed Mintues Failed To Trigger Big Move

Dear Traders,

One is always wiser in hindsight and so it turned out that it would have been a smarter decision yesterday to simply wait until the turmoil of the FOMC minutes has diminished. Despite the hawkish tone in the October statement, the minutes turned out to be a non-event for dollar bulls. While Sterling refrained all day long from moving downwards, the euro weakened to a low of 1.0617 in responses to the minutes. However, in the end, the bearish momentum fizzled out and the overall bias shifted to the upside - the only profitable movement yesterday.

Fed officials have signaled they expect to raise interest rates this year and reinforced views that the U.S. economy was strong enough to handle a rate hike. Fed officials largely agreed that the pace of increases would be gradual, the minutes showed. Thus, December is in play for a liftoff.

A rate hike in December has been already priced in and at the moment there is no fresh catalyst to breathe new life into the USD. This is why the greenback weakened rather than showing further bullish momentum. Nonetheless, investors will be looking to buy USD at lower levels going into next month. The euro may find a current resistance at 1.0775 or 1.0805. The British pound is facing the 1.53-level, which could act as a short-term resistance. Above 1.5310, it may climb towards 1.5360/80.

The most important pieces of data will be U.K. Retail Sales and the U.S. Philly Fed Index. U.K. retail sales are expected to show a decline. The risk for sterling could therefore be to the downside. Furthermore, the European Central Bank releases minutes from its last ECB meeting, which should reconfirm the ECB's dovish policy stance.

9:30 UK Retail Sales

12:30 EUR ECB minutes

13:30 USA Philly Fed Index

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