The Fed will take centre stage today with its statement, new projections and pressconference by Fed chairman Janet Yellen. Overall we see the risk skewed towards theslightly hawkish side. It is likely that the Fed will revise down the unemploymentforecast which currently stands at 6.2% by end-2014 – only slightly below the currentrate of 6.3%. Inflation will also be in focus – not least after yesterday’s upsidesurprise to core inflation in May (see below). The Fed is likely to change to a lessdovish tone on inflation where it has for some time stressed downside risks. A keyfocus will also be the ‘dots’ of Fed funds rate projections from each member. Themedian projection at the March meeting was 1.0% at end-2015 and 2.25% at end-2016. However, it only takes very few members to shift the median projection so wecould see a change here without too many members altering their forecast.
BoE minutes from the June meeting are released today. After Governor Carney’sMansion House speech on Thursday last week, pricing of the first rate hike has beenmoved forward to December this year (versus February 2015 before). For today’sminutes, expectations are for very explicit discussions regarding the timing of thefirst rate hike or maybe even a dissenting minority vote.
In Sweden, several economic indicators are due.
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