Hawkish Fed Minutes Meet Softening Dollar as European Activity Picks Up
The Federal Reserve's July FOMC meeting minutes revealed a more hawkish committee than expected, with three members dissenting in favor of an immediate interest rate hike. Despite this, the dollar has weakened and is on track for a weekly loss due to softer labor market data and the Treasury's move to expand its long-end buyback program.
The US economy was described as expanding at a solid pace by FOMC participants, with AI-related business investment and resilient consumer spending supporting growth. However, some participants noted that low- and moderate-income households are facing increasing strain due to eroding real disposable income.
In Europe, economic activity is picking up, with the Eurozone composite PMI reaching a nine-month high in August. The UK's private sector activity held up better than forecast, despite headline inflation accelerating on energy price caps and retail sales recording their first monthly decline since April.