FOMC Minutes Weigh on Market

Most Federal Reserve policymakers reckon that as long as economic data remains firm, the US Central Bank should initiate steps to trim its $4.50 trillion balance sheet of assets this year. The minutes of the March 14-15 policy meeting, released late Wednesday, showed that committee voting members also had a broad-based discussion on whether to phase out reinvestment and rolling over of existing securities all at once.

After hiking the benchmark interest rate to a target range of between 0.75% and 1.00% in March, the Fed signalled that it remains on track to lift rates at least twice more this year. While the dollar was initially higher as financial markets digested plans to tighten monetary policy even further, the US currency has since found itself back on the retreat. Meanwhile S&P 500 futures are perched below 2350 ahead of payroll data due tomorrow.

In keeping with the trend since reaching a multi-year high back in December, activity in the Chinese services sector expanded at its weakest pace in six months, hurt by intensifying cost pressures and a tepid growth in new orders. After printing at 52.6 in February, the Caixin China services purchasing managers' index aggregated by Markit Economics continued its recent downward streak, sliding to 52.2 in March.

The index however managed to remain above the 50-mark that separates expansion from contraction. The survey of mostly small and medium-sized firms showed that activity fell to its lowest point since September of 2016.The latest data should come as a blow to Beijing, which was expecting the sector to help shoulder a greater share of economic growth momentum. Even with the immense pressure on the US dollar, the Yuan continues to slide, with USDCNH trending just shy of 6.8900.