Daily Alert – Wednesday 26th July 2023: Looking for clarity from the Fed and ECB

Mark NugentDaily Alert, July 2023

Daily Alert – Wednesday 26th July 2023: Looking for clarity from the Fed and ECB

Good afternoon.

As predicted, it is very quiet in the run-up to tonight’s Federal Reserve rate announcement. There is unanimity among major institutions that the Fed will raise rates by 25 basis-points to the 5.25% to 5.50% band. All eyes will be on Chair Jerome Powell’s press conference at 730pm UK-time. He will be asked if the June meeting’s dot plot, which indicated a further 25 basis-points hike before year-end, is still valid in the light of better-than-expected inflation.

Last night I went long on GBPCAD, the theme being a strong GBP. So far, it’s doing OK.

Tomorrow, we have the European Central Bank (ECB). It’s much the same story. A 25 basis-point hike to 3.75% is widely expected and the focus will be on the press conference for indications of additional hikes this year. Of course, the ECB were very late to the rate-hiking party, before the need to be seen to be doing something caused a re-think.

I’ll be back on Friday.

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