July 27, 2022 10:45 GMT
- Focus on July FOMC: With firm consensus for a 75bp Fed hike, focus at the July meeting will be on Powell and the Statement. The key immediate question is the FOMC’s thinking on the magnitude of the next hike.
- A reduction in the size of hikes is likely starting in September, especially given weakening economic data and the ongoing moderation in inflation expectations. However, for now the FOMC is likely to be non-committal, apart from saying it anticipates ongoing hikes are appropriate.
- The greenback is modestly softer ahead of the decision today, with the USD Index edging off the week's best levels printed ahead of the Tuesday close. Losses are minor, however, with most major pairs trading wholly inside the week's range.