Credit Agricole CIB Research discusses its expectations for today's FOMC policy decision.

"We note that it took three consecutive drops of annual core inflation to sub-6% levels between May and July for the FOMC to conclude that inflation had peaked and encourage Fed Chair Jerome Powell to adopt a more data-dependent outlook at the July policy meeting. This could suggest that the Fed may want to wait for more evidence that inflation has peaked and that it is premature to expect peak Fed hawkishness today. Subsequently, while we expect the Fed to moderate the pace of its rate hikes to 50bp (consistent with the market expectations), we further think that the updated Fed dot plot could signal a terminal rate of 5.25% or well above the market expectation of 4.82% at the time of writing," CACIB notes. 

"If confirmed, the outcome of the FOMC meeting would constitute a hawkish surprise that could boost the USD’s rate appeal and help the currency regain some ground across the board. In addition, a hawkish Fed surprise could weigh on  on risk sentiment and thus boost the appeal of the USD as a safe haven as well," CACIB adds.