USD picture still clouded heading into FOMC
The news overnight has contributed to some support for USD. Central bank developments in the rest of the world have been on the dovish side (both RBI and RBA-more below) while data (in APAC and Japan) have come in on the softer side. However, we still think that market participants will remain wary of adding USD tactical positions ahead of the key data and central bank decisions later in the week. US economic news has been mixed on the whole, contributing to USD weakness. We expect this trend to persist in the near term and keep USD gains contained. On the manufacturing front, our economics team expects further improvement in the ISM manufacturing PMI on Thursday but Q2 GDP is likely to have registered at a meagre 0.8%q/q (saar). Today’s US data calendar is limited to the Conference Board consumer confidence index. We think the measure will improve from last month’s levels, but is unlikely to have a significant impact in the lead up to tomorrow’s FOMC statement.
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BNP Paribas