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Wednesday sees several data releases of note, including the release of French consumer confidence at 0745BST, followed by Italian business and consumer confidence at 0900BST. In the US, the FOMC policy decision at 1900BST will be closely watched, more for words than actual policy action.
French consumer confidence seen unchanged
Consumer sentiment increased markedly in June, rising by 4 points to 102 and shifting the index back above the long-term average of 100 for the first time since the start of the pandemic. Household's intentions to make major purchases in June improved sharply and consumer's assessment of their future standard of living saw a significant gain as well. Additionally, the fear of unemployment eased markedly to the lowest level since the start of the crisis. In July, markets expect consumer confidence to remain at June's level.
Italian consumer confidence forecast to edge higher
Consumer sentiment is projected to rise further in July to 115.5, after increasing to 115.1 in the previous month. June's uptick was led by an uptick of the economic and current climate. Business sentiment rose to 112.8 in June, while manufacturing confidence ticked up to 114.8. Markets look for another increase of manufacturing confidence to 115.3.
The flash EZ composite PMI rose sharply in July and the report noted that business activity in the Eurozone grew at fastest rate in 21 years. Although business confidence dropped amid concerns about the delta variant, the report noted.
FOMC seen unchanged
No policy change is expected and no fresh economic projections are due to be released at the July meeting. Rates at set to stay at the 0%-0.25% target range, with USD120 billion of monthly asset purchases to continue until "substantial further progress" is seen toward full employment and stable prices.
The committee will continue discussions over the timing and roadmap for tapering QE but no decision is expected at this meeting. Chair Jay Powell said earlier this month that the FOMC will be watching closely to see how inflation and labour supply evolve over the next six months. Should inflation persistently surprise to the upside, it would be prepared to adjust policy as needed.
Wednesday's events calendar remains quiet with no speeches scheduled for the day, bar the post FOMC presser from Fed Chair Powell.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.