Yesterday’s data calendar focused on the Eurozone. The Eurozone’s Q2 GDP result came in at +0.3% maintaining the pace of growth in Q1 and slightly ahead of consensus (+0.2%).
France led growth at +0.3% q/q (f’cast for 0.2%), followed by Spain at +0.8% q/q (f’cast for 0.5%). Meanwhile, the German economy contracted by 0.1% quarter on quarter while Italy increased by 0.2% (as expected).
Overall, the GDP statistics had no significant influence on the euro. On the currency front, the other major pairings are starting this morning at levels close to those set yesterday.
Today’s key data is a flash reading of Eurozone HICP inflation for July. However, today’s market attention is on the US Federal Reserve meeting. There is a strong consensus that rates will remain unchanged this month.
The market, however, is fully pricing in a 25 basis point rate decrease in September. As a result, investors will be looking for unambiguous guidance from the meeting statement and Chair Powell’s press conference about whether the Fed will lower rates in September.
As a result, today’s Federal Reserve meeting could cause the dollar to fluctuate.
For additional insights on how this could affect your business or to capitalise on market volatility – please reach out to speak to one of our experts.