The main Fed focus for the week are today’s minutes from the June FOMC announcement.
In this regard, BNP Paribas notes that for all of the previous Fed meetings this year the reaction to the minutes has been the opposite of the announcement (see chart).
This, according to BNP, suggests USD could draw some encouragement from the tone of the broader policy discussion in contrast to the dovish-leaning comments by Fed Chair Yellen at the press-conference.
“To the extent that important data has been released since the meeting, Yellen’s semi-annual Congressional testimony now scheduled for July 15 should be an important potential venue for signalling any changes to the Fed’s thinking ahead of the next formal policy meeting,” BNP adds.
“Although the USD’s post-payrolls struggles have clearly been disappointing for the bulls, we see few reasons to give up on the long view against currencies that are even cheaper from the funding perspective, such as EUR and JPY,” BNP argues.