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FOMC and global CPI, GDP releases set up major FX test this week

Forexlive flags the Fed, BoE and BoJ events as catalysts for moves across the US dollar, Treasury yields, gold and yen and euro pricing, with traders focused on whether outcomes are hawkish or dovish versus what is already priced in.

Reported · Written up by our desk · Central Banks

A busy week of central bank decisions and macro data is expected to drive volatile price action across foreign exchange and related markets, with traders weighing whether results land more hawkish or dovish than markets already expect, according to Forexlive.

The Federal Reserve meeting on Wednesday is described as the main event for the US dollar, Treasury yields, gold and Nasdaq futures. The report notes the Fed is expected to leave rates unchanged at 3.5% to 3.75%, while markets still assign some probability to a hike, and it highlights the core question as whether a hold is hawkish or dovish rather than simply whether rates move.

On Thursday, Forexlive points to Bank of England and multiple growth and inflation releases, including US GDP, core PCE and Eurozone GDP, as the week’s biggest scheduled event risk cluster. It also points to Friday for the Bank of Japan, Tokyo CPI, China PMI and Eurozone CPI, which could influence the yen, euro and other commodity sensitive markets.

The main macro theme, Forexlive adds, is whether higher energy prices translate into persistent inflation pressure or prove to be only a temporary headline shock. It also emphasizes that reaction depends on the gap between the data outcome and what was already priced in, warning that an initial move could either build into sustained repricing or quickly reverse.

Forexlive further notes expectations for Fed preferred inflation, with core PCE forecast for a monthly increase of about 0.17% to 0.19% and an annual rate near 3.3%, and it cites the Atlanta Fed’s GDPNow estimate of around 1.7% annualized growth in the second quarter, down from 2.1% in the first quarter.

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