The minutes from the March 20-21 FOMC meeting are due at 2 pm EST.

Revisiting the March 21 FOMC statement

On March 21, the FOMC statement dampened its upbeat January tone on growth, while downgrading its view on housing. The Fed downgraded its assessment on housing by describing the ???adjustment ??¦is ongoing??? , after the January??™s FOMC indicated the improvement as ???some tentative signs of stabilization??? . The Committee did maintain its vigilance on inflation despite modifying the language regarding additional firming. The statement noted: ???Recent readings on core inflation have been somewhat elevated??? after indicating in the January statement that readings on core inflation ???have improved modestly in recent months, and inflation pressures seem likely to moderate over time???.

What will be today??™s reaction to the minutes?

Since the minutes will shed more light on the FOMC??™s downgrade in growth and housing, as well as the notable change to the statement of replacing ???additional firming???, by ???Future policy adjustments??? , the market reaction could be dollar negative. As for the Committee??™s slight upgrade of inflation vigilance, it is likely to be dominated by the findings on growth and housing. This is especially the case after several CEOs of US housing/building companies have issued cautious assessments ahead, warning that the worst may not be over.

Friday??™s stronger than expected March payrolls may have been a temporary upside surprise in a deteriorating US data picture, but the net slowdown in services jobs to 137K from 180K had dragged the 3-month moving average to its lowest level since July 2006. The 3-month average of the headline payrolls also fell to an 8-month low.

Yesterday??™s remarks from Philadelphia Fed??™s Plosser indicating that the US economy is not as strong as expected two months ago, are a rare admission of misforecasting by a Fed official. Indeed, Fed Chairman Bernanke has repeatedly forecasted the recent moderation in growth, but never explicitly stated that the growth rate has slowed to lower level than was previously forecasted.

Sterling drops after volatile session on taxes, housing

Possible Euro rebound on FOMC minutes

USDJPY bullishness turns vulnerable

USDCAD hits fresh 4-month lows, tests 200 day MA

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