Will Trump get his wish and the independent Fed finally bent to his will?
Today’s focus will be on this evening’s interest rate announcement from the FOMC. After months of pressure from Donald Trump, Fed Chair Jerome Powell is expected to announce an interest rate cut of 25 basis points according to the CME Groups Fed Watch tool this is a 76% probability and a 50 basis point cut a 24% probability. If Mr Powell was to surprise the markets and keep rates on hold, cables strong resistance at 1.20 would likely be tested.
US and Chinese officials will be reconvening today in a bid to end yearlong trade talks.
Following unsuccessful visits to Scotland and Wales Boris Johnson’s attention turns to Northern Ireland. Having been booed in both Wales and Scotland, it is hard to see that Mr Johnson will receive a warmer welcome at Stormont later today. Westminster MP’s have recently been accused of trying to wrestle power away from the devolved parliament that has not been functioning since 2017. Boris has been quoted by the BBC as promising to do ‘everything within his power’ to restore the power sharing government. It is certain that Brexit will also be discussed with the Irish backstop remaining one of the key issues with Boris calling it ‘no good, it’s dead’. It is unlikely that this visit will have an immediate impact on the currency markets but with the PM’s slim majority in parliament it is crucial he is able to gain support from the DUP.
Sterling’s decline at the start of this week has been underpinned by an unproductive call between the UK PM and Leo Varadkar that confirmed a chasm has opened up between the two negotiating parties. Mr Johnson is understood to have reaffirmed that the UK “will be leaving the EU on October 31st, no matter what.” It is likely this is a play to regain control in a very high stakes game of poker. Where the EU to offer late concessions in negotiations that Boris is unable to get approved by government a ‘technical extension’ would most likely happen.
|12:01 AM||Gfk Consumer Confidence JUL||-14||-13|
|02:00 AM||NBS Manufacturing PMI JUL||49.3||49.4|
|06:00 AM||Consumer Confidence JUL||41||38.7|
|08:00 AM||GDP Growth Rate YoY Flash Q2||2.2%||2.4%|
|08:00 AM||GDP Growth Rate QoQ Flash Q2||0.6%||0.7%|
|10:00 AM||GDP Growth Rate QoQ Flash Q2||0.2%||0.4%|
|11:00 AM||GDP Growth Rate QoQ Adv Q2||0.0%||0.1%|
|12:00 PM||GDP Growth Rate YoY Prel Q2||0.6%||1.2%|
|07:00 PM||Fed Interest Rate Decision||2.25%||2.5%|
|07:30 PM||Fed Press Conference||-||-|