TALKING POINTS – FOMC, US DOLLAR, US TREASURY, TRUMP
- US Dollar may resume uptrend on hawkish FOMC policy statement
- Treasury deficit-financing plans might compound upswing in yields
- New Zealand Dollar falls as soft jobs data weighs on RBNZ outlook
A smattering of European economic data is unlikely to inspire much of a response from financial markets as all eyes look ahead to the FOMC monetary policy decision. A rate hike is not expected but Chair Powell and company may dial up hawkish rhetoric to assert their independence after President Trump talked down tightening efforts recently.
Needless to say, such an outcome is likely to bode well for the US Dollar. Upward pressure may be compounded by a refunding announcement from the US Treasury. It will unveil its latest borrowing plans. Debt issuance is expected to increase as a $1.5 trillion tax cut and $300 billion in new spending widens the deficit. A bond supply increase may push yields higher.
The markets may be positioning for just such an outcome, with the greenback rising against the spectrum of its G10 FX counterparts in Asia Pacific trade. The New Zealand Dollar suffered outsized losses after a soft set of unemployment figures signaled RBNZ rate hikes may be delayed longer than previously expected. The currency tellingly fell alongside local bond yields.
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ASIA PACIFIC TRADING SESSION
EUROPEAN TRADING SESSION
** All times listed in GMT. See the full economic calendar here.
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--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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