Fed Minutes Cool QE3 Debate

The minutes of the March 8 FOMC meeting cast major doubts about the likelihood of another round of quantitative easing. The US dollar surged after the release while gold slumped. Australias trade balance is the lone indicator on a quiet calendar.

The FOMC minutes did not contain any reference to a serious discussion about QE3 or any other simulative measures, disappointing those who were expecting hints of a discussion to pave the way for action at the end of April.

The minutes said a couple members indicated further action could be necessary if the economy slows but this was down from a few who made a similar pronouncement in January. The overall take on the economy was similar to the statement, indicating slightly better growth and temporarily higher inflation.

EUR/USD took the brunt of the hit, falling to 1.3214 from 1.3340 in a flash, but other pairs also experienced large declines against the US dollar. The bounce was shallow as well, suggesting the markets first take may have staying power.

Asia-Pacific Preview

Australias trade balance for February is the lone indicator of consequence on the docket in Asian trading. A surplus of A$1.1 billion is expected after a A$673 million deficit in January. Rumors of a major barrier in AUD/USD at 1.03 continue to circulate and the bounce from 1.0301 after the FOMC minutes suggest there is some credence to the talk.

China is closed for the final day of a three-day holiday and trading is likely to be quiet in the latter part of the session ahead of the ECB decision.