Daily Market Analysis – 27th July, 2015
By FxGrow Research & Analysis Team
US Dollar weak ahead of FOMC Rate Decision
The US Dollar is weak ahead of the much awaited Federal Open Market Committee policy meeting this week on Wednesday.
According to the Analyst expectations 80% believe that Fed will hike interest rates in September and give a clear direction to the future rate hikes.
The Fed officials will meet on Tuesday and Wednesday and issue a statement at the conclusion of Wednesday’s meeting. Investors will be looking for directions as to whether the Fed is moving closer to raising interest rates in September this year.
Globally investors seem to be cautious if Fed fails to give any indication of a September rake hike in its policy meeting on Wednesday.
In the FOMC statement, look for only minor cosmetic changes to the post-meeting communique... do not expect policymakers to provide any new clues with regard to a potential rate hike in September - Deutsche bank.
In the minutes to the April meeting the FOMC had a discussion about whether or not to signal in the statements leading up to liftoff that a rate hike is likely coming in the near term. The Committee concluded that it would not signal a rate hike in the meeting prior to liftoff. Instead, the first hike would be decided on a meeting-by-meeting basis - JP Morgan.
The July FOMC statement should emphasize data dependence and eschew any overt signals about the timing of liftoff. We look for a cautiously optimistic assessment of the outlook as data have been somewhat more mixed since the June meeting. With the market pricing less than a 40% chance of a September hike, July communications should push those odds up slightly - Bank of America.
At issue is whether the FOMC will alter its forward guidance to prepare the markets explicitly for a near-term rate hike. If the Committee feels confident it can start normalizing policy in September, which has been our forecasted lift-off date, we believe it will adjust the language - Credit Suisse.
The Euro zone's manufacturing sector declined as the PMI for the Euro area came in at 52.2 for the month of July. German PMI fell to 52.2 while French PMI fell to 49.6 in the month of July.
"Eurozone economic growth lost only slight momentum in July amid the rollercoaster events of the Greek debt crisis during the month. The rate of expansion remained reassuringly robust to suggest that it was by-and-large 'business as usual' for the region as a whole" - Chris Williamson, chief economist at Markit.
Crude oil prices have moved lower to $47.87 due to a weak trend in Asia and slump in the manufacturing sector in China.
Gold has recovered its losses and is currently trading at 1099.57, while Silver is flat at 14.68
27th July 2015 – 09:55hrs GMT
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