The Sterling maintains recent momentum and edges higher broadly as the week starts. BoE deputy governor Bean said he'd welcome the "symbolic step" of rate hike as that would be "an indication that we are on the road back to normality". And, "having interest rates at an emergency level for a very long time is not a situation one wants to be in." Regarding the economy, Bean noted that the central bank was "starting to see better balance" with pickup in investments and optimism from manufacturers. He said there are "plenty of reasons to be cheerful". After BoE governor Carney's talk last week, the majority of economists are expecting the first rate hike by March next year, with some expecting a hike as early as this year end.
The dollar is generally soft, except versus euro and swissy, as markets focus turn to the FOMC rate decision this week. Fed is widely expected to continue tapering by lowering the monthly asset purchase by another USD 10b to USD 35b. Fed will also release updates to its economic forecasts. Recent lower than expected GDP figure might feed into 2015 outlook. But there would likely be no change in the inflation forecasts. A focus is on the post meeting statement's reference to the development in jobs and inflation. But that would likely be unchanged too. So, overall, the FOMC meeting could trigger little reaction to the markets.
The dollar index lost momentum after rebounding to 81.02 and turned sideway since then. A major reason for that was the lack of direction in EUR/USD. As long as 79.88 support holds, further rally is in favor in the index. Strong support was seen from long term fibonacci level at 78.72 and rebound from 78.90 would expect extend beyond 81.48 resistance in near term. However, the index is struggling to take out 55 weeks EMA (now at 80.55). Break of 79.88 will turn focus back to this 78.72 key support level instead.
As for today, UK Rightmove house price rose 0.1% mom in June. Eurozone CPI will be the released in European session. US will release Empire state manufacturing, TIC capital flow, industrial production and NAHB housing index in US session.