The FOMC minutes last night laid further paving on the pathway to a December rate increase from the Fed. Of those who held beck from voting for higher rates, several noted that it was a ‘close call’. Furthermore, there was debate on the negative impact of a continued low interest rate policy, which suggest that not only do the Fed want to raise rates, but also from the other side, just don’t want to keep them so low. The impact on the dollar was muted, in light of the gains over the past two weeks. This has taken the dollar index towards the mid-March highs, with the pound taking the brunt of pressure. The euro has weakened only modestly in comparison, but EURGBP has held above the 0.90 level as a result of the recent sterling weakness. The FTSE has been largely a beneficiary of the weaker tone to sterling, but that has waned in the past couple of sessions as the currency weakness remains something of a double-edge sword. On that note, UK retailer Tesco has stopped listing some products as they dispute price increases with their suppliers.
The data calendar is on the light side today, with speeches from Fed President Ester George speaking later in the day and FOMC Chair Yellen tomorrow, together with BoE’s Carney. Oil has pulled back modestly from the highs earlier in the week, but Brent remains above the USD 50pb level for now. Overall, underlying volatility in both FX and commodities has been increasing through the month to date and more elevated levels are likely to continue as we approach the US presidential election early next month.