As we are approaching the conclusion of the July FOMC meeting on Wednesday, the focus among FX market participants is on whether the FOMC statement along with a round of very critical US data releases this week, will trigger a turnaround in the USD recent correction.
"We do not expect this week’s US data releases and FOMC statement to drive a USD turnaround just yet. Indeed, the opposite appears likely. As a result, we will have to wait for clearer signs that the economy has stabilized before reloading broad USD longs," answers Morgan Stanley.
"Our US economists expect a 0.4% 2Q real GDP print in next Wednesday’s release, confirming the sharp downshift in economic momentum under the weight of a fiscal tightening that dented the Chairman’s confidence in the US recovery," MS projects.
"Against this backdrop the FOMC’s statement reportedly may strengthen its forward rate guidance. Specifically, the FOMC may lower its unemployment target to 6%, reflecting the disconnect between the unemployment rate and broader measures of labor market performance. And the Committee may add a lower inflation threshold, committing to keep the funds rate extraordinarily low at least until the unemployment target is reached while inflation remains below the 2.5% inflation trigger, or while inflation remains below its lower inflation threshold," MS adds
"By formalizing Fed’s recent concern about too-low inflation and a premature tightening in financial conditions, the new guidance framework should extend the USD depreciation. It also should further underline the data-dependency of Fed policy, increasing the market sensitivity to downside US data surprise," MS argues.
Copyright © 2013 eFXnews
Tidak ada komentar:
Posting Komentar