The Federal Reserve released the minutes from its July meeting, sending a clear hawkish signal. The minutes show that three committee members voted in favor of a 25-basis-point rate hike, while two non-voting members said that if they had had a vote at the time, they would also have supported the hike. Most officials believed that if inflation cannot continue to fall to the 2% target, a rate hike would be unavoidable. The July meeting ultimately kept interest rates unchanged at 3.50%-3.75% with a vote of 9 to 3. Market expectations for a rate hike in September dropped sharply from 55% a month earlier to around 34%.

Meanwhile, the United States’ outstanding public debt officially surpassed $4 trillion this week, reaching a new record high. The combination of ballooning debt and hawkish rate-hike expectations has increased uncertainty about the U.S. dollar’s outlook in the near to medium term. $EURUSD $DXY

For information purposes only and does not constitute investment advice.