USD could see volatility today amid Q2 GDP figures and Fed meeting

Matthew Ryan, CFA Ebury

The dollar has advanced against almost every other currency since the start of the week, as markets bet that the signing of trade deals will ease the burden on the US economy.

Combine this with month-end flows, recent resilience in US economic data and the very weak valuation of the dollar (which we think has left the currency oversold) and it is no surprise to see the greenback rebounding against its peers.

Today could be another volatile one. This afternoon’s preliminary Q2 GDP figures are expected to show a decent rebound from the modest downturn in the first three months of the year.

If anything, we think that estimates for a 2.4% annualised rebound may even be a touch on the conservative side.

Meanwhile, the Federal Reserve will once again defy pressure from President Trump and hold rates steady for the fifth consecutive meeting later today. Chair Powell will likely keep the door open to a September cut, without committing to one either.

The most interesting aspect of the meeting will, however, be whether we see a couple dissents in favour of an immediate cut.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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