The Fed decision is Wednesday
Citi discusses its expectations for this week's FOMC policy meeting.
"We expect the 28 July FOMC Meeting to be broadly neutral, with the Fed acknowledging the possibility of a new Covid wave, while remaining optimistic about the outlook and watchful for upside inflation risks. In line with Citi's US economists, we expect the Fed to have detailed discussions about tapering, and likely make some decisions about the nature of tapering and policy sequencing, but without disclosing full details or timing," Citi notes.
"We remain positive on overall risk sentiment but see room for continued volatility after markets stabilized fast last week. We are biased to fade Dollar strength but prefer to focus on relative value ideas in FX, e.g. long GBPCHF, long NOKSEK and short AUDNZD," Citi adds.
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