Investing.com — On Wednesday, the release of Federal Open Market Committee (FOMC) minutes from its May 1 meeting indicated a more hawkish stance than expected, providing a temporary boost to the U.S. dollar. The minutes showed that while the policy was considered ‘well positioned’, there was openness among many members to implement additional rate increases if necessary. In addition, there was a debate among “many” participants about whether current policies were restrictive enough to address economic problems.
The hawkish tone of the minutes comes in the context of high inflation rates and a strong labor market reported in March. Despite more positive data in April, some FOMC members, including Neel Kashkari and Chris Waller, have expressed continued concerns about inflation. However, overall sentiment within the FOMC has become less aggressive since the May meeting.
Currently, the strength of the dollar is under scrutiny as new economic data, including Purchasing Managers’ Indexes (PMIs) from both the US and the Eurozone, are about to be released. Eurozone PMI figures are expected to offer a potentially more positive outlook than those of the US. Additionally, Nvidia’s (NASDAQ:) robust earnings report, released after yesterday’s market close, could contribute to improved risk sentiment.
Today’s U.S. economic calendar also includes new home sales, the Kansas City Fed Manufacturing Activity Survey and unemployment benefits data. The Dollar Index (DXY) faces challenges in maintaining its position above 105.0, although a gradual appreciation of the dollar ahead of the May 31 release of the US Personal Consumption Expenditures (PCE) cannot be ruled out.
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