BNPP: USD focus on the data rather than FOMC statement this week, stay patiently long USD
The pullback of the USD in recent trading sessions has been hand-in-hand with a pullback of US yields with the 2yr Treasury falling back below 70bp, triggered by data inadvertently released by the Fed showing that Fed board staff are a good deal more cautious on the economic and policy outlook than the FOMC members. This week, we view that the USD is unlikely to get much direct help from the FOMC with this week’s policy statement is likely to stop well-short of signalling rate hikes are imminent. Rather, this week’s data should be a key focus. We expect core durable goods orders to show only a tepid rebound on Monday but Thursday’s Q2 GDP release will include benchmark revisions which could revise away some of apparently seasonal weakness evident in the Q1 data. We remain patiently bullish USD, and maintain a short EURUSD recommendation with our stop trailed to entry at 1.1025.