Global macro overview for 12/10/2017:
The FOMC Meeting Minutes revealed bigger than expected worries about inflation pressures. The concerns about low inflation were expressed in the dovish camp, whilst the hawkish camp put more weight on labour market data than current inflation data. As the minutes suggested, many Fed officials continued to believe "cyclical pressures" would "show through to higher inflation" in the medium term and many judged that "at least some of the softening this year to be idiosyncratic". Moreover, the policymakers "continued to project that inflation would edge higher in the next couple of years and that it would reach the Committee's longer-run objective in 2019".
Fed fund futures are pricing in 88% chance of a December hike, slightly lower than yesterday's 93%. Nevertheless, Fed is still on track for a December hike, despite persistently low inflation or the dismal job market data as FOMC members saw economic growth as healthy and improving. Moreover, some FOMC members warned that any hesitation in "removing policy accommodation could result in an overshoot of the Committee's inflation objective in the medium term that would likely be costly to reverse."
In conclusion, there was not anything completely new in the FOMC Meeting Minutes that market participants wouldn't have known before. Even the recent poor job market data were somewhat expected as the weather-related damages made by the hurricanes was obvious, so the disappointing NFP figures could not change the Fed's point of view.
Let's now take a look at the USD/JPY technical picture at the H4 time frame. The market is trading in a narrow price range between the levels of 111.98 - 112.50 in oversold market conditions. The next nearest technical support is seen at the level of 111.45 and the next important technical resistance is seen at the level of 112.91.
