At 14.00 Washington DC time today, the US Federal Reserve will publish the minutes of its June meeting on monetary policy. This will drive the USD and US yield curves. Economic growth continues to accelerate, despite expectations of a cyclical slowdown. This increases the probability of additional rate hikes – perhaps a fourth one late this year. Also interesting will be the Fed's view on trade and inflation.
Impact on G10 currencies should be limited, since the Fed’s tightening cycle is already priced in. Still, emerging market, interest rate sensitive currencies should come under pressure. Currencies with significant USD liabilities such as TRY and INR are extremely exposed.
By Peter Rosenstreich
