USD: Modest Recovery Ahead On A Status-Quo Fed & A Rebound In Q2 US GDP – ING

ING FX Strategy Research expects the USD to re-gain some ground over the coming days on a combination of unchanged Fed policy on Wednesday and a strong US GDP reading for Q2 on Friday.

"We expect the market narrative around the July FOMC meeting this week to centre around two things: (1) the Fed's 2H17 policy sequencing and (2) the concerning nature of accommodative financial conditions. The view that the Fed will begin its balance sheet normalisation policy in Sept will likely be supported by the July statement noting that the process could start “relatively soon”.

The front-end of the US rate curve seems to be priced correctly for such a Fed policy sequencing, with markets still erring over a Dec hike; a status quo Fed statement could be mildly supportive for USD," ING argues.

Source: ING Global Markets ResearchOriginal Article