US Dollar Turns To FOMC Rate Decision, Q2’17 US GDP To Stop The Bleeding

Fundamental Forecast for DXY Index: Neutral

Despite an empty economic docket on both the data and speeches sides, the US Dollar’s selloff found no reprieve last week, as the greenback ended as the second worst performing currency overall. Notable, despite a seemingly dovish European Central Bank President Mario Draghi, EUR/USD gained +1.68% while soaring into two-year highs. Similarly, despite a decidedly dovish Bank of Japan, USD/JPY lost 1.26%. Now, with the US Dollar (via DXY Index) sitting just off of yearly lows, attention turns to the full slate of US economic data and the Federal Reserve policy meeting on Wednesday to see if the greenback can find any stabilizers.

While it is considered a ‘high’ rated event, the July US Consumer Confidence reading on Tuesday is probably the least important ‘high’ rated event on the calendar this week. There has been a longstanding disconnect between sentiment readings and real economic activity, so the data will probably be overlooked if not dismissed by the market. Although US equity markets are near all-time highs, consistent acrimony in Washington D.C. has probably started to erode otherwise stellar confidence readings (which themselves are near their highest levels since 2000).

The week truly begins for the US Dollar on Wednesday, even though the Federal Reserve is not expected to move on rates. After all, it is an ‘off-cycle meeting,’ or one that won’t produce a new summary of economic projections (SEPs) and a press conference with Fed Chair Janet Yellen. Accordingly, the policy statement will garner all of the attention.