US Dollar May Fall as Fed Meeting Minutes Inspire Profit-Taking

Talking Points:

• British Pound Unlikely to Find Fuel in BOE Minutes, Jobless Claims Figures
• US Dollar Disproportionally Vulnerable to Drop on FOMC Meeting Minutes
• See Economic Releases Directly on Your Charts with the DailyFX News App

The release of minutes from this month’s Bank of England policy meeting is unlikely to offer much by way of directional guidance for the British Pound. Last week’s publication of the central bank’s Quarterly Inflation Report already presented markets with the latest on where Mark Carney and company intend to steer in the coming months. That means the Minutes document is unlikely to deliver much that is not already priced into the exchange rate. The same goes for January’s UK Jobless Claims report, where a 25,000 drop in applications for unemployment benefits is expected.

Later in the day, the spotlight turns to minutes from January’s FOMC meeting. The report may carry a disproportionally higher risk of generating US Dollar weakness versus strength. The greenback has struggled to build upside momentum even when high-profile economic data proved decidedly upbeat (such as January’s payrolls print). This likely reflects over-extended positioning, with speculators near their most net-long on record according to data from CFTC. With that in mind, a purely status-quo text may not yield much by way of directional momentum. On the other hand, an expression of worries about an increasingly wobbly global landscape may pour cold water on rate hike speculation and send the benchmark unit downward.