The Fed has made it a priority of theirs to convince investors that the pace of tightening matters more than the timing of the first rate liftoff in a decade. But have investors been listening? The minutes from the Federal Open Market Committee (FOMC) meeting from July 29 will be published tomorrow, Wednesday, August 19 at 2:00pm EDT. The Fed statement release following the last rate announcement by the central bank to keep rates at a record low provided very little guidance. With U.S data dependency continuing to be the name of the game, investors are hoping that Fed minutes will be able to give a clue to the pace and timing of future Fed rate increases.
Be forewarned, the notes from the FOMC will feel a bit outdated, as Fed member opinions have to be reframed by the Chinese Yuan devaluation and its potential impact on the U.S. economy. A no hike next month could end up building expectations for tighter policy as the Fed has said that a later rate liftoff could require faster subsequent hikes.
The August Empire Manufacturing survey published on Monday collapsed to its lowest level in six-years, falling to -14.9 this month. This particular business conditions index is the first regional Fed manufacturing report for August, and along with Japan reporting its economy shrinking in Q2, reminds investors of the global economy’s still fragile state. The New York Fed report showed that the employment levels were flat while +34% of respondents said conditions had actually worsened, while +19% said they had improved.
Economists polled by Reuters see a 55 percent chance of the Federal Reserve raising rates twice in 2015. September has fallen from the top of the list with the survey showing a 60 percent chance of the monetary policy tightening cycle starting in the fall. The end of the year shows an 85 percent chance and with last week’s China currency intervention and a strong, but inline with forecasts, U.S. retail sales print have diminished the probability of a September rate hike. The September and December Federal Open Market Committee (FOMC) meetings are favored due to the fact that both are followed by a press conference. Given the market importance of the first Fed rate hike since 2006 it is expected chair Janet Yellen will want to address questions from the financial press to better communicate the central bank’s intentions.
The Bank of England implemented a change in how it publishes the minutes from its monetary policy committee. The BoE is foregoing the two week waiting period in favor of an immediate release after the rate announcement. Given the Federal Reserve has been caught by this two week lag where market conditions have changed dramatically from rate announcement to member minutes it could be a matter of time before the Fed borrows from the Old Lady’s best practices.
Central Bank events to watch this week:
Wednesday, August 19
2:00pm USD FOMC Meeting Minutes
Tentative JPY Monetary Policy Statement
*All times EDT
For a complete list of scheduled events in the forex market visit the MarketPulse Economic Calendar 
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