Tomorrow brings the July FOMC rate decision, and there is no press conference after the statement is released at 2PM ET. Given that the Fed just posed a rate hike, and also taken with the fact that the bank has appeared rather reticent to roll out any ‘new’ information at a non-press conference meeting, and traders will likely want to go into tomorrow with rather low expectations.
The one point of contention is whether the Fed discusses the timing of balance sheet reduction; but this may be something that we have to wait to hear more about in September. The next rate decision from the Fed after tomorrow’s meeting is almost two months away, set to take place on September 19-20, and this could make for a more opportune time to roll out details on strategy around the balance sheet while also getting a couple months of data behind the most recent rate hike to see how the U.S. economy has responded. But perhaps more pertinent to near-term price action in the U.S. Dollar are the data releases following tomorrow’s FOMC meeting. On Thursday morning, we get US Durable Goods and Trade Balance numbers for the month of June, and on Friday we get 2nd quarter GDP numbers out of the United States.
High-Impact U.S. Data on-Deck, post-FOMC
Taken from the DailyFX Economic Calendar; prepared by James Stanley
As we walk into this outlay of data points, the U.S. Dollar remains extremely weak, and this is likely due to soft US data throughout much of 2017. After the rip-roaring run in the post-Election backdrop, hopes ran high for the ‘reflation trade’ to lead-in to robust growth in the U.S. economy. That simply hasn’t happened, and data in the United States has been unable to keep pace with those elevated expectations. Meanwhile, growth in Europe has begun to show with a greater degree of consistency, and this has led markets to start pricing-in actual interest rate hikes from the ECB before the end of next year. This flow into the Euro has been an additional negative for the U.S. Dollar; and if we’re going to see a reversal in this trend, it’s likely going to need to start with stronger data prints relative to expectations.
