5 Major Bank FOMC Trades


FOMC banks29 July, AtoZForex.com, Vilnius – The following are the expectations for today's FOMC July decision from five major banks, together with some additional thoughts on the USD into the event.

BNP Paribas

Kicking of the FOMC trades, the projection is from BNPP. The FOMC meeting is unlikely to provide any bullish support for the USD, as the statement is not expected to be change materially in terms of renewed forward guidance. Our economists expect the FOMC to upgrade their description of the labour market, but this will be offset by removing language noting stabilization in energy prices,” BNPP projects. There will be no press conference or new projections announced at this meeting, further adds Paribas, and the statement’s overall message is likely to be continues data dependant, with no punch to financial markets to bring forward Fed hike pricing materially, finishes BNP Paribas.

Barclays

Yesterday’s disappointment in consumer sentiment reinforces Barclays’ view that the FOMC will abstain from giving a strong signal about its policy intentions at the July FOMC meeting, thus, no clear signal could be expected from today’s FOMC. Moreover, the bank believes the committee will want to see the second quarter GDP release this week and upcoming inflation along with employment reports to weigh the strengths going into September. In Thursday’s advance release of Q2 GDP, we look for 3.0% growth, driven by private consumption and non-energy investment spending” added Barclays.

Goldman Sachs

Like the majority, Goldman does not expect any additional language intended to be prepared in the statement for rate hikes. “We expect the statement to drop its prior reference to stable oil prices, but to leave other comments about inflation unchanged,” points out GS. December remains the chosen day of Goldman Sachs for the Fed to start their cycle.

Bank of America & HSBC

Both major banks share the same opinion, believing the committee will keep the target rate for the Fed funds rate unchanged at 0-0.25% and no explicit changes to the July FOMC policy language about the signalling of liftoff will be made. Rather, the statement will be data dependant and might further reference the outlook in the July post-meeting statement. Having the data somewhat more mixed since June, BofA expects a “cautiously optimistic if noncommittal” message. This, therefore, may be a slightly more hawkish than current market expectations, but not enough to trigger a major reprising, Bank of America finishes.

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