FX Update: The dollar has remained underpinned
FX Update: The dollar has remained underpinned amid the scaling back in Fed easing expectations, which looks 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) rose fractionally, to 97.24, but 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. 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 data before the FOMC on July 30-31. Analysts are expecting 1.8% q/q and 3.2% y/y outcomes, which should have a restraining effect on the doves at the Fed. In Japan, 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. The pound took a tumble on news that government cabinet member Alan Duncan resigned (he has stated he will not serve under a Boris Johnson prime ministership, and will be the first of many resignations in the expected event that Boris becomes the new PM tomorrow), and a report by UK think-tank NIESR that Brexit-related uncertain may have already tipped the UK economy into recession. Cable printed a two-session low at 1.2462.