Global macro overview for 16/08/2017

Global macro overview for 16/08/2017:

The FOMC Meeting Minutes for the month of July is scheduled for release at 06:00 pm GMT and this will be the event of the day or even week. Let's recall that in the last statement FOMC stated that the process of reducing the balance sheet total will begin in the near term and inflation is lower than assumed by the Fed mandate. In response to such a combination, the US Dollar was heavily overestimated. The question of the balance sheet is not in doubt, as market participants expect it to shrink as early as in September. Patrick Harker, the President of Federal Reserve Bank of Philadelphia, one of the larger doves at FOMC, has recently announced that the process will be painfully boring and predictable. In this light, one should focus on the description of price trends and the number of decision makers and to what extent they are concerned about the weakness of inflation and how many believe that this is a transitional phenomenon. Taking into account the weakness of the US Dollar after the July meeting and still extremely negative market sentiment towards the US currency, it is highly possible to see a bigger chance for a positive Dollar reaction after today's FOMC publication.

Let's now take a look at the US Dollar Index technical picture at the H4 time frame. The market is trading inside of a nave channel just below the key technical resistance at the level of 94.47. Any violation of this resistance and the golden trend line would put the bulls back into control over this market. The next potential technical resistance is at the level of 95.06 and 95.44.

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