Following last week’s hawkish 50bps rate increase from the European Central Bank, attention will shift across the pond to the US, where another 75bps increase is expected from the Fed. This week’s announcement, taking place on Wednesday evening, will be keenly observed by market participants as they gauge how many more hikes are likely this year as well as interpreting how the Fed views the possibility of a recession and their general assessment of the health of the US economy.
The greenback will likely be impacted by any fresh forward guidance the Fed provides. It will be interesting to see how the buck reacts if Powell does express a will to significantly slow down the pace of tightening at this juncture. It’s uncertain whether the US dollar will be able to maintain the considerable ground it gained in the first half of 2022.
Additionally, this week sees US Q2 preliminary GDP data, which is set to be positive, therefore avoiding a technical recession. From the eurozone, flash July CPI is due for release. Expectations are for another jump up to the 8.7% mark.
Have a good week.
8:15am, July 25th 2022
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