BREAKING: USD gains slightly after FOMC minutes

FOMC minutes were released at 7:00 pm BST today. Document related to May 2-3, 2023 meeting during which Fed strongly hinted that it may pause its rate hike cycle. Minutes have mostly echoed FOMC statement and Powell's comments during press conference and did not include any major surprises. Key takeaways:

• Officials agreed that inflation was still unacceptably high

• Officials were divided whether further interst rate hikes are necessary

• 'Some' officials saw additional tightening as needed while 'several' saw it as appropriate to halt hikes

• Officials stressed need to emphasize data-dependent approach

• Some officials said that statement should neither hint at rate cuts, nor at need for more rate hikes

• Officials see timely increase in US debt limit as essential to avoid risk of adverse dislocations in the financial system

• Most officials saw rising downside growth risks on credit

• Almost all officials see upside risks to inflation outlook

• Extent of potential hikes had become less certain

• Fed staff sees mild recession as likely near the end of the year

US dollar ticked higher following the release but scale of move has been small. This should not come as a surprise given that FOMC minutes showed barely anything new. US equity indices moved around 0.1% lower in the first 5 minutes following minutes release.

EURUSD moved lower in intiial reaction to FOMC minutes but has since erased all of the move and is trading little changed compared to pre-release levels.