The march minutes have been released today. We have now some outlook for the FED’s balance sheet reduction and probable 50 bps hike in early May.
- Monthly U.S treasury cap: $60B
- Mortgage based securities: $35B
In total FED plan to shrink its balance sheet by $95B / month. Everything over the cap will be reinvested. Last but not least: "it will be appropriate to consider MBS sales". So it gives the FED plenty of ammunition to subdue future inflation.
Regarding the rate hike scale, most of the participants said they would like to go to 50 bps rather than 25 bps but the development of the war in Ukraine is still a source of uncertainty. They also leave the door open for a further 50 bps hike in futures meetings.
AUD/USD is down 0.4% to 0.7477 erasing its RBA jump and probably driven by FED hawkish’s minutes.
EUR/USD attempts a rebound off its support (1.0899).
What’s in the pipe?
- St. Louis Fed’s James Bullard, Atlanta Fed’s Raphael Bostic, Chicago Fed’s Charles Evans speak at separate events Thursday
- Reserve Bank of India rate decision Friday
USD/JPY @ 123.75 - bullish trend
EUR/USD @ 1.0897 - Bearish trend
Breach of 1.0898 support
GBP/USD @ 1.3089 - Bearish trend - major support : 1.1301 / resistance : 1.3209
AUD/USD @ 0.7485 - next support : 0.7446
MACD: average mean breach to the down
CCI: Bearish divergence
Parabolic SAR: Bearish
USD/CNH @ 6.3672 - Just above major support: 6.3624