The sense of optimism that began last week with lower-than-expected inflation numbers has met its first hurdle. Minutes from the Federal Open Market Committee meeting held on Tuesday revealed the Fed is of the opinion that inflation is still unacceptably high. Officials reiterated the stance that high interest rates will remain for the foreseeable future; the 2% inflation target not close enough to justify any other path.
The news smothered the strong upwards momentum that stocks had been enjoying to leave them in no man’s land for the time being. Major indices made no real pullback, trading within tight ranges on Tuesday.
Gold was conspicuously unperturbed by such events, gaining over one percent to reacquaint itself with the $2000 mark. Intra-day trading took it as far as $2007 before closing at $1998 on the day. Oil has also made a break from its recent downtrend, Brent Crude climbing back up to $82 a barrel after seeing lows of $77 late last week.
The Dollar Currency Index continues to retrace from recent highs although hawkish minutes from the Fed meeting may have put the brakes on such a move for now. Across the Pacific, news regarding the Japanese Yen is not quite so concrete, recent price action the result of speculation that the Bank of Japan will likely end its negative rate policy early next year. The sentiment was enough to push USDJPY firmly down to 148 Yen, its recent excursions above the critical 150 level over for now.
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