FOMC minutes, OPEC +, Democrat’s Move and Inflation Data

From the point of view of macroeconomic statistics, yesterday was primarily interested by inflationary data from the UK, Eurozone and Canada. Weak inflation in the Eurozone can be interpreted as one of the signs of an economic depression and, in general, is a negative signal for the euro.

The FED has published the minutes of the last meeting of the FOMC. The tone was rather gloomy: the economy is recovering more slowly than it could be, especially the consumer sector. At the same time, the Fed was in no hurry to assure the markets that it is ready to act here and now to support the economy. Quite the contrary, the Central Bank has traditionally noted the importance of fiscal incentives. Negative rates are not on the agenda. With regard to yield curve control (an unconventional form of quantitative easing), the issue has been discussed, but remains open.

It is not surprising that such minutes somewhat diminished the degree of confidence of buyers in the stock market and returned optimism to buyers of the dollar. Especially when you consider yesterday's information that the Republicans and Democrats still maybe ready to work out a compromise solution, which each of the parties can give out for a victory. Let us remind that the incentive package is a very serious argument in the election race and the size of the election dividends will depend on who appropriates its authorship.

So, the Democrats said that they are ready for a compromise solution: a partial plan now and the rest after the Presidential elections. Given that the gap in the positions of Republicans and Democrats is about $ 2 trillion, this proposal has a real chance of being implemented. In this situation, both sides save face, and the economy will receive the injection of money it needs.
In light of such news, today we tend to buy the dollar across the entire spectrum of the foreign exchange market.

A meeting of the OPEC + Monitoring Committee took place yesterday. It did not bring any special surprises. OPEC + participants announced the introduction of penalties, according to which ineffective executors of the transaction will be obliged to compensate for 2.3 million barrels per day from a reduction in oil production. As a result, the level of the overall reduction in oil production in August and September should be more than the planned 7.7 million barrels per day. Meanwhile, US oil stocks fell by another 1.6 million barrels. Judging by the reaction of the oil market, none of this news was seen as a reason for growth. This only confirms our recommendation to sell oil at current prices.