EUR/USD – NEUTRAL BIAS – (1.1100-1.1400)
The US dollar has weakened modestly following the Fed’s decision to
leave policy unchanged which has prompted some initial relief. Still the
Fed has signalled strongly that it moving closer to resuming rate hikes
in the near-term which remains dependent on the incoming economic data.
Economic data releases in the week ahead are unlikely to materially
alter market expectations for a Fed rate hike by year end having little
impact on US dollar direction. Of more interest will be comments from a
number of Fed officials although the underlying message is likely to be
similar to that from the policy meeting. The Fed’s continued caution
towards raising rates even as it judges that the US economy has picked
up and risks are now balanced reinforces the market’s scepticism over
their desire to tighten policy as planned.
the market already pricing very little Fed tightening in the coming
years, the scope for further US dollar weakness in the near-term should
A more material weakening of the US dollar would require evidence of building public support for Donald Trump in opinion polls particularly in key swing states ahead of the Presidential election.
The first Presidential debate between Donald Trump and Hillary Clinton will take place on Monday.