USD: The FOMC meeting is the main event of the day. With the move towards average inflation targeting being priced in (following Chair Powell’s speech in Jackson Hole) the focus will be on the new updated economic forecasts. As per the FOMC Preview, we may see an upward revision to the GDP (reflecting the recent stronger data) but both inflation and interest rate forecasts out to 2022 are unlikely to change much. This mix of a better growth outlook and an indication for looser policy for longer should be modestly supportive of risk assets and keep USD softer today.
CAD: Our analysts are far below consensus for today’s August CPI (‐0.2% m/m vs +0.1%). One off factors that depressed the July release (transport and travel) are not expected to unwind until the September release. USD/CAD technicals suggest short‐term support at 1.3143, with resistance at 1.3208 and 1.3257.
EUR: Getting a helping hand from the Fed Should the Fed deliver the message of higher GDP forecast but low rates for longer, this should be modestly positive for EUR/USD and take the cross closer to the 1.1900 level today.
GBP: Short-lived support from global risk sentiment Improved risk sentiment and a softer USD helped GBP (both vs the dollar and the euro) but given the heightened Brexit risk, we expect the positive spillover from global factors into sterling to be short-lived and muted.