The latest FOMC minutes do not contain clear hawkish cues, thus failing to boost the US dollar rally in major currency pairs.

Market participants closely observe the release of the Federal Open Market Committee (FOMC) meeting minutes from July 25-26, 2023, launched last night. However, the minutes surprisingly lack clear hawkish cues and have failed to boost the greenback rally. The US Dollar Index (DXY) continues to trade sideways around the 103.50 range at the beginning of the European session on Thursday (August 17, 2023).

us dollar index

The FOMC minutes reveal that Federal Reserve officials perceive the risk of further inflationary pressures, indicating the possibility of additional interest rate hikes. However, they also emphasize the need for caution in making future decisions.

Some meeting participants perceived "some tentative signs that inflation pressures were easing" and even suggested the interest rate hike. Despite losing the vote, and the FOMC proceeded with raising rates in July, they emphasized that the subsequent decisions would depend on incoming data.

According to the minutes, it was mentioned that the participants in the FOMC meeting had observed a high level of uncertainty about the cumulative impacts of the previous monetary policy tightening on the economy.

Differences of opinion have also been evident in the recent public communications of Federal Reserve officials. Federal Reserve Chair Jerome Powell expressed his support for the prospect of further interest rate increases in a press conference following the latest FOMC meeting.

However, some other Federal Reserve officials have recently urged that interest rates be maintained at their current levels. Among the proponents of keeping the interest rates unchanged are Federal Reserve Bank of New York President John Williams and Federal Reserve Bank of Philadelphia President Patrick Harker, voting members in the 2023 FOMC.

The differences of opinion revealed in this release of FOMC minutes further strengthen market doubts about the prospects of future Fed interest rate hikes. Data from the CME Group indicates that the probability of another Fed interest rate increase this year is less than 40%.