It was the minutes

Nobody knows

At first glance the minutes of the Federal Open Market Committee's meeting looked good for the US dollar. It strengthened by a quarter of a cent or so immediately after they came out. But closer scrutiny revealed 15 instances of the words "uncertain" or "uncertainty". And, as everybody knows, investors don't like uncertainty.

The advent of president Trump has the FOMC flummoxed.  On one hand they see a possibility that growth might be faster than currently projected, as a result of Mr Trump's proposed tax cuts and infrastructure spending. On the other they accept that "growth might turn out to be faster or slower than they currently anticipated", depending on the tax, spending, regulatory and other possible changes to policy. Like the rest of the world, the FOMC has taken note of Mr Trump's promises but they don't know which of them he will deliver. 

There were also doubts about inflation. Some saw upside risks, as a result of higher oil prices, while others "pointed out that a further rise in the dollar might continue to hold down inflation". So that's a don't-know too. The interpretation of all this was that there might well still be two rate increases this year, maybe even three, but the Fed is not as gung-ho for tightening as some had hoped.

A day for the odd trio

When investors had absorbed the FOMC minutes (well, most of them, not all 7,000 words) they unabsorbed the dollar. They moved instead into the yen, the Loonie and the rand, all of which are 1.4% firmer on the day against the Greenback. 

The euro was close behind the leading trio but the Swiss franc, curiously, was not. Nor could Sterling keep up with the leaders. It is up by nearly one US cent on the day, 0.8%, but lower on average by -0.3% against the other dozen most actively-traded currencies.

Although the FOMC minutes rather hogged the limelight there was other stuff going on yesterday. Purchasing managers' indices from the Euroland services sector almost all came in above forecast and higher on the month, as did Britain's construction sector PMI and mortgage approvals figure.  Euro zone inflation was higher too, at a provisional 1.1%..

Last PMI pickings

The last pickings of the monthly PMI round come out today, together with a handful of other low-key ecostats. Sterling's supporters will be hoping the UK services PMI is as punchy as its manufacturing and construction brethren.

Analysts are looking for 54.7 after the previous month's 55.2. After surprises on the upside with the other two measures investors will doubtless now be expecting today's number to be better than expected. As on-target reading could therefore be negative for the Pound.

Elsewhere in Europe there are inflation data from Switzerland and industrial production figures from Sweden. The US services PMIs come out this afternoon, prior to which the Bank of England's chief economist, Andy Haldane, will be taking part in a debate.