The FOMC minutes will be scrutinized for what they might suggest about the timing of the normalization path. Of course the Fed made no policy moves at the July 25, 26 policy meeting, but said it would begin QT “relatively soon.” That sentiment has been reiterated from various Fedspeakers since then and supports our forecast for an announcement of balance sheet unwinding next month. On rate hikes, no one anticipates action at the upcoming meeting, and there have been no indications from the Committee or Fedspeakers. Indeed, if anything, the slowing in inflation has many Fed officials, including some voters like Kaplan, talking about patience, which could suggest they may be hesitant to boost rates again this year. Data, and especially price numbers, over the next few months will be crucial for the rate outlook.
The USDJPY trades at 110.75 north of the key 20 day moving average at 110.65, EURUSD holds 1.1700 and Cable gives up all its post jobs gain and trades back under 1.2860.
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