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EUR/USD[1] sits near the fresh 2018-low (1.1676) following the limited reaction to the Federal Open Market Committee (FOMC) Minutes, and the exchange rate may continue to work its way towards the November-low (1.1554) should the European Central Bank (ECB) cast a dovish forward guidance for monetary policy.

Image of daily change for major currencies


image of daily change for EURUSD

The FOMC[2] Minutes suggests the central bank will continue to implement higher borrowing-costs over the coming months as ‘it would likely soon be appropriate for the Committee to take another step in removing policy accommodation,’ but the central bank appears to be in no rush to alter the monetary policy outlook as ‘it was premature to conclude that inflation would remain at levels around 2 percent.’

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With that said, it seems as though the Federal Reserve will tolerate above-target price growth for the foreseeable future as ‘a temporary period of inflation modestly above 2 percent would be consistent with the Committee's symmetric inflation objective and could be helpful in anchoring longer-run inflation expectations at a level consistent with that objective,’ and Chairman Jerome Powell and Co. may continue to tame bets for an extended hiking-cycle as ‘the federal funds rate was likely to remain, for some time, below levels that they expected to prevail in the longer run.

Meanwhile, the account of the ECB meeting may reveal the central bank’s intention to buy more time as ‘measures of underlying inflation remain subdued and have yet to show convincing signs of a sustained upward trend.’ The Governing Council may merely stick to the current script as ‘an ample degree of monetary stimulus

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currensceneFLOGO WHTsquareThough not the oldest form of currency, some form of shell money appears to have been found on almost every continent. The shell most widely used worldwide as currency was the shell of Cypraea moneta, the money cowry.

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