Markets will temporary move attention from Brexit to central bank meetings. FOMC rate decision, economic projections and press conference will be the main focus today. There is practically no chance for a rate hike today in spite of all the speculations last month. The poor May job data and current Brexit risk will certainly tie FOMC's hand. Fed is unlikely to give any solid hint on whether there will be a July as policy makers will first get through EU referendum in UK and then June non-farm payroll data. Hence, the market moving part of today's event will be on Fed's updated economic projections. And in particular, the so called "dot plot" of interest rate expectations.
Back in March, FOMC projected the median fed fund rate to be 0.90% by the end of 2016, 1.90% by end of 2017 and 3.00% by 2018. That's equivalent to two 25bps hike in 2016, four in 2017 and another four in 2018. It should be noted that there was quite a drastic revision from December's projections, reflecting the turmoil in the financial markets at the beginning of the year. At this point, economists are not expecting any change in the dots for 2016. Majority of FOMC members would likely maintain a forecast of 2 hikes this year. However, recent development might trigger some to revise down the rate path for 2017 and 2018. And, some speculates that policy makers might, to an extreme, half the number of expected hikes in 2017 and 2018 to two 25bps moves. The greenback will likely have some strong reactions to the revisions in dot plots in any case.
Dollar index's rebound from 93.42 continued this week and is now pressing 55 days EMA. We're holding on to the view that , fall from 100.51 is seen as the third leg of consolidation pattern from 100.39. Such fall and the consolidation has likely completed at 91.91 already. And, there is prospect of further rise later. But for near term, we'd expect more range trading between 93.46 and 95.96 first. Any breach of 93.46 should be brief. Upside breakout is expected at a later stage.
In addition to FOMC rate decision, the economic calendar is busy today too. New Zealand current account balanced turned to NZD 1.31b surplus in Q1. Australia Westpac consumer confidence dropped -1% in June. UK will release job data in European session, with Eurozone trade balance also featured. Canada will release manufacturing shipments. US will release PPI, Empire State manufacturing index, industrial production.