- FOMC decision could be seen as the most crucial event for today
- Oil prices could be more volatile due to the DoE’s release
- UK’s GDP might draw attention in morning trading
Today it’s not all about the FOMC decision as it usually tends to be. It stems from the fact that there will be neither a press conference nor new macroeconomic projections as it’s a so-called ’small’ meeting which it’s not accompanied by additional materials. On the other hand, a continued wave of feeble data doesn’t justify an interest rate hike as for now, in effect, market’s odds for such a move till the end of this year have slid lately below 50%.
9:30 am BST – UK’s GDP for Q2 (preliminary): There are expectations that GDP growth in a second quarter has slowed down in a yearly basis from 2% to 1.7%. However, quite a sturdy pace is to be maintained with regard to a quarterly basis as a consensus indicates an increase 0.3% (0.2% was registered in the prior quarter this year). Let us remind that macroeconomic developments in the UK’s economy have been quite favorable for the pound. Even as retail sales came in below estimations it managed to rise substantially compared with the prior reading for May. What’s more, inflation trends have slowed down in June which could be a encouraging sign in the face of real wages. The lower inflation is, the less negative impact on real wages, thereby, households have more money to spend.
4:00 pm BST – US new home sales: We got the data on existing home sales on Monday which turned out to be sub-par. In that respect, there is no doubt that higher average mortgage rates weigh on home sales. Nonetheless, in the longer term it could carry more positive than negative effects as an overall indebtedness level of households could reduce on higher credit costs. A consensus suggests a rise by 615k, whereas the last month saw an increase by 610k.
4:30 pm BST – DoE crude oil stocks: A weekly change in US oil inventories tends to bring heightened volatility in oil prices. Given that the API unveiled a huge draw in stocks, expectations regarding the DoE’s report could be placed much above those seen in official consensuses as an estimation points to a draw just by 3.3mb. Having said that, risks could be tilted to disillusion when the DoE reveals a less impressive decrease. All in all, oil prices have broken out a relevant support area which could lead to a continued upward move if the DoE confirms downward momentum in stockpiles.
9:00 pm BST – FOMC meeting: The Fed has a tough nut to crack. The labour market seems to be in almost perfect condition, but inflation has slowed markedly. In its last statement the central bank did acknowledge that it is monitoring inflation developments closely. However, the latest data was certainly something that the FOMC didn’t want to see. Growth in prices slowed, retail sales fell and soft indicators like the Philly Fed gave up part of their gains. That is why the market is currently at a crossroads and the outcome of the meeting could be surprising in either direction. According to the interest rates market, one thing is almost certain – the monetary policy won’t change at this meeting.