Bank of America Global Research discusses its expectations for tomorrow's FOMC June policy meeting.
"The June FOMC meeting should deliver the expected 50bp rate hike as Chair Powell and the Fed had previously communicated. We will be keeping an eye on the changes to the Summary of Economic Projections (SEP) and dot plot. We look for this year's median dot plot to move up to 2.50-2.75% and expect some negative revisions to growth and positive revisions to inflation.
No further changes to the QT path should be observed this time around. We do not expect further changes in administered rates as the effective federal funds rate (EFFR) remain in the Fed's target range. We remain sanguine about the USD over the near- and medium-term," BofA notes.
"We ultimately look for EUR-USD to be focused around the 1.05-area level for the second half of the year, while the ECB is now belatedly set to embark on its own rate hiking cycle next month...We do continue to expect moderate USD downside in the Dollar Bloc, where relatively strong central bank action and continued elevated commodity prices should provide support for CAD, AUD and NZD," BofA adds.