After passing the US FOMC, the US second quarter GDP preliminary figures will be announced today. Fed Chairman Jerome Powell toned down the hawkish tone, saying, “It is appropriate to curb rate hikes from a certain point in time,” and “it depends on the data whether to repeat unusually large rate hikes.” The market is showing a reaction to sell dollars centered on the dollar yen. According to CME Fedwatch at the moment, the next September FOMC will include a 0.5% rate hike of 66% and a 0.75% rate hike of 34%. The situation is expected to raise interest rates 0.25 percentage points less than before.
Depending on the data, GDP is attracting a lot of attention. According to market forecasts, the annual rate is + 0.5% compared to the previous quarter. Last quarter it was + 1.6%. Since it is an annual rate from the previous quarter, if this is to be returned to the previous quarter, it will be a low growth of about + 0.1%. The possibility of negative results cannot be denied. It seems speculative that Powell said the United States “doesn’t think it’s in recession right now.”
Please note that the foreign exchange market may show a slightly extreme reaction to the US GDP quarter-on-year rate figures.
In other items, the growth of the deflator and core deflator, which are inflation indicators, is expected to slow down, and it will be interesting to see if this slows down more than expected. The announcement will be made at 9:30 pm Japan time.
Pay attention to the movement of the USD after US GDP. If the number is weak, it is assumed that the USD sale will be further spurred.