Likelihood that US economy will be slowing into year-end will continue to colour the USD outlook – Rabobank

This week’s US data releases will be instrumental in informing market expectations regarding the risk of further Fed tightening. Economists at Rabobank analyze USD outlook.

Stronger-than-expected data could boost the prospect of another Fed rate hike beyond July 

While today will be a quiet session due to the US July 4 holiday, the slew of US economic data due before the end of the week will likely bring more clarity as to the need for additional Fed policy tightening beyond this month. In particular, the US Labour data on Friday will shine fresh light onto the relative tightness of the labour market.

While stronger-than-expected data could boost the prospect of another Fed rate hike beyond July and underpin the USD near-term, the likelihood that the US economy will be slowing into year-end will continue to colour the outlook for the greenback.