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FED’S minutes, J.Powell is behind the curve

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What’s new?

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

FX rates

USD/JPY @ 123.75 - bullish trend

RSI: Overbought

Williams %

R: Overbought

EUR/USD @ 1.0897 - Bearish trend

Breach of 1.0898 support

CCI: oversold

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

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