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In view of ING analysts, investors seem to have high expectations for Chair Powell’s testimony tomorrow as they attempt to assess the magnitude and timing of the upcoming FOMC moves.

Key Quotes

“Today, markets will look for clues from a crowded schedule of Fed speakers in an attempt to anticipate tomorrow’s testimony by Powell. The Fed Chief will himself deliver a speech today when opening a panel on stress-testing, but we attach a very low probability to any policy-related comment.”

“What is likely to attract most attention will be comments from St. Louis Fed President James Bullard, arguably the most dovish member of the FOMC. He previously expressed the idea that the Fed will need to cut rates by 50 basis points by year end, but later acknowledged that a 50bp move in July was likely excessive.”

“Should he reiterate this view, markets will likely further consolidate their current expectations for a 25bp cut on 31 July, keeping rates and the US dollar broadly unchanged. Comments by another dove, Atlanta Fed President Raphael Bostic, will likely have a less relevant impact given that Bostic is not a voter this year. All in all, we expect today’s speeches to provide only small hints about tomorrow’s testimony by Powell and expect the dollar to stay range-bound throughout the day.”