Minutes Show Fed was Right to Wait for Brexit Results

The Federal Reserve minutes released at 1800 GMT on Wednesday showed policymakers said it was prudent to wait for more data and the Brexit vote before raising rates.

The minutes for the June 14-15 meeting, which took place ahead of the June 23 Brexit referendum, showed widespread unease by Federal Open Market Committee members.

“Members generally agreed that, before assessing whether another step in removing monetary accommodation was warranted, it was prudent to wait for additional data on the consequences of the U.K. vote,” according to the minutes.

Policymakers also cited a severe slowdown in hiring by U.S. employers as a reason for leaving interest rates steady last month, the minutes showed.

In the minutes of the June meeting, many Fed policymakers who participated in the policy discussion stressed the sharpness of the hiring slowdown could be statistical noise, and most argued the economy would be ready for rate increases unless a financial or economic shock knocks America off course, according to the minutes.

September U.S. Dollar Index futures weakened and are likely to close on their low, following the release of the Fed minutes. The inability to catch a bid likely means that investors are convinced the central bank will not raise rates in 2016 due to the stagnant U.S. jobs market and the turmoil created by Britain’s decision to leave the European Union.

Despite the weaker U.S. Dollar, August Comex Gold futures also retreated from its earlier session high of $1377.50. The market ended up giving back more than half of its earlier gains. The USD/JPY also recovered most of its earlier losses that were caused by flight-to-safety buying in Asia and Europe.

August crude oil prices were able to recover from early session weakness after a two-day decline encourage bargain hunters to take on fresh long positions. Short-covering was also evident once the market stopped going down. Early in the day, the market sold-off under pressure from a gasoline glut and economic worries over Brexit.

Profit for turning crude oil into gasoline known as the gasoline “crack,” fell to a February bottom below $13 a barrel as oversupply in the motor fuel forced U.S. refiners to cut output. Vessels carrying gasoline-making components could not unload at New York Harbor this week due to a glut.

Later today, the American Petroleum Institute (API) will release its data at 2030 GMT, while data from the U.S. government’s Energy Information Administration (EIA) is scheduled for release at 1500 GMT on Thursday.

A Reuters poll showed analysts expected weekly U.S. commercial oil stocks to have fallen for a seventh consecutive week, along with a probable drop in gasoline stockpiles.

U.S. stocks closed higher Wednesday, helped by rising oil prices and after the Fed released minutes from its June meeting. This is a sign that investors believe the Fed will refrain from any further interest rate hikes in 2016.