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Jul 25 - 12:55 PM

USD: Will The Fed Inject Fresh Upward Momentum Into The USD Rally? - MUFG

By eFXdata  —  Jul 25 - 11:00 AM

MUFG Research discusses the USD outlook around this week's FOMC policy meeting.

"The scaling back of Fed rate hike expectations ahead of this week’s policy meeting has been driven by two main factors. Firstly, Fed speakers including Governor Waller have signalled that another 75bps hike remains the most likely scenario rather than stepping up the pace of hikes further. A 75bp hike would still bring the policy rate more closely in line with Fed’s estimate for the neutral policy rate (median estimate at 2.40%). Secondly, the US economic data flow has helped to ease some concerns over an un-anchoring of inflation expectations (University of Michigan survey for July) and signalled an increasing risk of a sharper slowdown in growth (Philly Fed & US PMI surveys for July)," MUFG notes. 

"We expect the Fed to continue to deliver a hawkish policy message this week and keep alive expectations for another 75bps hike (+58bps currently priced in) in September," MUFG adds. 

Source:
MUFG Research/Market Commentary

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