FX Update: The dollar has remained underpinned
FX Update: The dollar has remained underpinned amid a scaling back in Fed easing expectations, which look to have settled on a 25 bp cut at the upcoming FOMC rather than a 50 bp move. The narrow trade-weighted USD index (DXY) has risen fractionally, to 97.24, but has so far remained below Friday's peak at 97.29. EUR-USD has made time in a narrow range in the lower 1.1200s, holding above last week's two-week low at 1.1199, while USD-JPY carved out a three-session high at 108.06. Regarding the Fed, last week's wall-back by the New York Fed of dovish remarks by its president, Williams, along with the the suggestion on Friday by uber-dove Bullard that only a 25 bp move is in the pipeline have quelled market speculation for a 50 bp move. This Friday's release of advance Q2 GDP out of the U.S. will be the final key release before the FOMC on July 30-31. Analysts are expecting 1.8% q/q and 3.2% y/y outcomes, which should keep the Fed on for a 25 bp rather than 50 bp move. In news, the ruling coalition of Japan's Prime Minister Abe won a majority in the upper house of Parliament following yesterday's election, which seemed to elicit some yen selling as it implies a continued bias toward maximum monetary stimulus. Sterling has been trading steadily into the widely expected victory of Boris "no-deal Brexit" Johnson tomorrow at the final stage of the Conservative Party's leadership context.