USD mixed ahead of FOMC – BBH

FXStreet Insights Team FXStreet

US Dollar (USD) is mixed and still trading just under its 200-DMA. 10-year Treasury yields testing the top-end of its 3.95%-4.20% range in place since September, and US equity futures are treading water, BBH FX analysts report.

Fed is expected to cut 25bps, markets eye SEP and vote split

"The FOMC is expected to trim the target range for the Fed funds rate by 25bps to 3.50-3.75% (90% priced in). The press release is likely to stress again that inflation 'remains somewhat elevated', and 'downside risks to employment rose in recent months'."

"The Fed could announce plans to start buying short-term T-bills given recent upward pressure on funding rates. This would be a liquidity management measure, not a change in the underlying stance of monetary policy. Instead, the FOMC vote split, Summary of Economic Projections (SEP) and Fed Chair Jay Powell’s press conference will steer the hawk-dove policy tilt."

"Markets are positioned for a hawkish cut as US two-year swap rates (3.20%) are slightly above the FOMC 2027/2028 funds rate projection (3.13%). That means the bar for a dovish surprise is low."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD holds above 1.3350 with the 200-day SMA capping gains

The British Pound appreciates against the US Dollar on Tuesday to trim previous losses and return to the 1.3375 area, aiming to retest resistance at the key 200-day Simple Moving Average. This is a popular indicator, which lies a few pips below 1.3400 and has been capping Pound’s recovery over the last two weeks.

EUR/USD pops to weekly highs near 1.1460 on US CPI

EUR/USD regains traction and climbs further, revisiting the 1.1460 region on Tuesday. The pair’s marked uptick comes as the US Dollar continues to lose momentum across the board, particularly after US CPI data came below estimates in June.

Gold picks up pace, targets $4,100

Gold reverses the recent weakness and reclaims the area beyond the key $4,000 mark per troy ounce on Tuesday. The precious metal’s recovery picks up pace and approaches the $4,100 region in the wake of the release of lower-than-expected US inflation figures in June.

Crypto Today: Bitcoin, Ethereum, XRP extend sideways trading amid ETF outflows, US-Iran war escalation

Bitcoin hovers around $62,500 amid prevalent sideways trading. Meanwhile, major altcoins such as Ethereum and Ripple are holding above crucial support levels at $1,700 and $1.05, respectively, reflecting ongoing consolidation across the crypto sector.

Fed Chair Warsh to note they have no tolerance for persistently elevated inflation

According to the prepared remarks that Fed Chairman Kevin Warsh will deliver during his testimony on the Semiannual Monetary Policy Report before the US House Financial Services Committee, he will note that the Fed has no tolerance for persistently elevated inflation.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.