The Fed signalled it has moved a step closer to lift-off later this year. The July statement highlighted the progress the US economy has made towards meeting the FOMC's conditions to start normalising rates.
With the meeting out of the way focus now turns to the upcoming US data - the preliminary Q2 GDP print and initial jobless claims data today as well as NFP next week.
Arguably, the Q2 GDP release may have a stronger market impact than the July FOMC. CACIB and the market consensus expect the release to show that the economy grew at a 2.5% (SAAR) clip in Q2. We also expect upward revisions to Q1, which should garner market attention to boot.
Keep in mind that in today’s release the BEA will incorporate updated methodical changes and seasonal adjustments that should in the end revise away some of Q1 blip – but not all. However, if the net impact of the revisions provides a solid upgrade to momentum in H2, it likely to help strengthen the market’s conviction for Sep.
Besides GDP today we also get the Employment Cost Index for Q2, which remains the most comprehensive wage growth index in the US. The jobless claims data will likely attract some attention after recent prints suggested that the number of claimants hit some of its lowest levels in 40 years.
Further ahead, we also get ISM Manufacturing for July and July NFP next week. Solid labour market momentum should keep Sep live. In turn, growing rate hike bets should keep USD supported broadly.
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