The Dollar extends recent rally with the dollar index hitting a 11-month high as focus turns to BoE and FOMC minutes today. The FOMC minutes are expected to struck a slightly more hawkish tone as Fed would be starting to prepare for rate hike next year. FOMC members would likely express some optimism that US is getting closer to full employment and price stability. But, it's unlikely for the minutes to contain more messages, including update of the exit strategies etc. The more important event for dollar for the week would likely be the annual event of the Jackson Hole symposium beginning on Thursday. With the theme 'Reevaluating Labor Market Dynamics', we look forward in this year's conference to the Fed's latest view on US labor market slack as well as Fed Chair Janet Yellen's keynote speech on Friday.
The dollar index surged through recent resistance of 81.71 yesterday and reaches as high as 81.99 so far. The development confirmed resumption of whole rebound from 78.90 and current rise should now target 161.8% projection of 78.90 to 81.02 from 79.74 at 83.20 next. We'd be cautious on strong resistance above there and below key resistance of 84.75. But before that, near term outlook will now stay bullish as long as 81.37 support holds.
BoE minutes are another focus for today. We expect to see rationales for maintaining the Bank rate at a record-low 0.5%5 and the asset purchase program at 375B pound. The central bank indicated at the quarterly Inflation Report last week that the committee has a 'wide range of views' on the level of slack in the economy. BOE governor Mark Carney's noted recently that 'we have to have the confidence that prospective real wages are going to be growing sustainably. We don't have to wait for the fact of that turn to raise them'. This suggested that the tightening might begin sufficient evidence of sustainable economic growth. On the broader economy Carney indicated that 'the expansion is proceeding, momentum is more assured' and 'wherever the finish line was in the depths of the crisis, we are much more than halfway toward that finish line now'.
Elsewhere, Japan trade deficit widened to JPY -1.02T in July, all industry index dropped -0.4% mom in June. Australia Westpac leading index dropped -0.1% mom in July. Germany will release PPI, UK will release CBI trends orders and Canada will release wholesale sales today.