Markets, USD Shrug FOMC Minutes

The FOMC minutes were supposed to be dovish but markets cant shake off St Louis Fed's Bulllard's remarks about an ultra rapid taper (see Tweets below). The loudest voices at the FOMC are calling for a near-term taper but the FOMC Minutes indicated that the core of the Fed wants to see more data. Weak outlook from broker RobinHood did not help either. Despite a dollar dip on the data, it stormed back in Asian trading and increasingly threatens a run on stops as multi-month levels give way. US initial jobless claims add a further risk. Tuesday's Premium trade of shorting NASDAQ at 15000 deepens further in the money. NZDUSD long was stopped out at 6840. 

The Fed Minutes showed that 'most' participants judged that the substantial further progress goal had been met in regards to inflation but 'most' also said it hadn't been met on employment. The timing on employment is the big open question and 'most' see that being met before year end. That's what the market was expecting but, notably, 'several' don't see it being met this year.

Further, the Fed sees what everyone else is seeing around delta, markets and new risks from softening consumer data. That was underscored by Goldman Sachs on Thursday, who cut their Q3 US GDP forecast to 5.5% from 8.5% on the slowdown.

All that is USD negative and that's what unfolded initially but when Tokyo came online Thursday, a relentless dollar bid appeared. That was in spite of flat trading in bonds and equity futures, suggesting it was flow-driven.

The risk is that those flows begin to run stops. EUR/USD fell to 1.1667 in the dollar bid, which is the lowest since November. AUD/USD and NZD/USD also hit multi-month lows.

There's a high risk this dollar bid becomes self sustaining through a feedback loop of lower commodity prices, stops and risk aversion. Tread carefully around the release of weekly initial jobless claims at 1230 GMT.