Headlines:

• All your Fed previews in one place
• Italian bond yields rise after S&P revises outlook to stable from positive
• Physical flows through Nord Stream 1 pipeline fall as expected
• Germany August GfK consumer sentiment -30.6 vs -28.9 expected
• Switzerland July Credit Suisse investor sentiment -57.2 vs -72.7 prior
• US MBA mortgage applications w.e. 22 July -1.8% vs -6.3% prior

Markets:

• EUR leads, NZD lags on the day
• European equities higher; S&P 500 futures up 0.9%
• US 10-year yields up 1.1 bps to 2.797%
• Gold up 0.3% to $1,721.93
• WTI crude up 1.2% to $96.14
• Bitcoin up 1.6% to $21,318

European morning trade today featured the usual pre-Fed lull although the dollar did ease slightly while equities are looking fairly optimistic after the declines yesterday. German and French consumer sentiment continue to show further signs of deterioration as the economic outlook for Europe remains bleak.

US futures were higher since Asia trading and have held on to gains, keeping steadier and looking to erase the drop from yesterday. Despite the rebound, it will all come down to the Fed today to see how the remainder of the week will play out.

As for the dollar, some positioning flows ahead of the main event is seeing it slip a little but key technical levels continue to hold up as they have since the end of last week.

EUR/USD moved up from 1.0135 to 1.0171 while GBP/USD nudged higher from 1.2050 to 1.2087 during the session, both keeping within the ranges seen in the past few days.

USD/CAD also nudged lower to 1.2848, down 0.3% on the day, but is still seeing support around 1.2815-20 intact. Meanwhile, AUD/USD recovered from a 0.6912 to move up to 0.6950 currently though still keeping below the 50.0 Fib retracement level at 0.6982 and the 0.7000 mark.

The bond market is a key spot to watch in any post-Fed reaction but isn’t showing much appetite on the day with Treasury yields little changed.

This article was written by Justin Low at www.forexlive.com.

There’s a slight nudge lower in the dollar now with the euro hitting a session high of 1.0171 against the greenback after hovering around 1.0130-50 levels for the most part during the session. It isn’t much but the dollar is holding slightly softer on the day as we continue to wait on the Fed decision later today.

I wouldn’t look much into price action at the moment as it is very much fueled by positioning flows going into the main event.

EUR/USD is still seeing sellers hold near-term control with price keeping below the 200-hour moving average (blue line) at 1.0176. Meanwhile, even if the dollar is weaker on the day, key technical levels are still very much intact as outlined here against other major currencies as well.

This article was written by Justin Low at www.forexlive.com.

JP Morgan sees a recession coming to Europe as a looming gas crunch and Italy’s political upheaval will pressure economic activity in the region. That said, the firm sees just a mild recession in the works but that would be enough to limit the ECB’s tightening cycle.

They are forecasting Eurozone GDP growth to slow to 0.5% in Q3 before contracting by 0.5% in both Q4 this year and Q1 next year. As for their ECB outlook, they say that:

„We expect the ECB to deliver another 50 bps of hikes by year-end. We now expect 25 bps in September and 25 bps in October.“

The firm previously called for 75 bps more worth of rate hikes by the ECB with a 25 bps rate hike penciled for December.

This article was written by Justin Low at www.forexlive.com.

• Prior -6.3%
• Market index 276.0 vs 281.1 prior
• Purchase index 206.4 vs 208.0 prior
• Refinancing index 631.4 vs 655.7 prior
• 30-year mortgage rate 5.74% vs 5.82% prior

Mortgage activity continues to decline with both purchases and refinances falling once again. Housing market sentiment isn’t looking good and that may be a spot that the Fed needs to watch in the months ahead.

This article was written by Justin Low at www.forexlive.com.

In case you missed it earlier, Adam put up a great preview here earlier in the day. We’ve been stuck in a bit of a pre-Fed lull in Europe and that isn’t anything too surprising. All eyes are on the Fed today and that will set the tone for the remainder of the week – alongside the US GDP report tomorrow.

Anyway, here’s a list of previews to wrap your head around before the main event later today:

• Morgan Stanley: Dollar to get a boost
• ANZ: 75 bps no longer feels significant
• Moody’s: Fed to stick with 75 bps rate hike
• MUFG: 75 bps and a hawkish message (BofA preview also)
• Goldman Sachs: Watch for any shift in Fed approach
• TD: 75 bps and option for more similar increases to come
• Scotia: Is there a dollar-trading pattern around FOMC decisions?

/US dollar

This article was written by Justin Low at www.forexlive.com.