A calmer geopolitical backdrop and the signing of the U.S.?China Phase 1 agreement is, on balance, favorable for global growth, however, the 86-page Phase 1 agreement has not yet been made public. There are doubts how comprehensive the deal is, and whether the Phase 1 agreement will be implemented in full by both governments.

Joseph Capurso

The minutes are likely to reiterate that the U.S. economy is 'solid' and that current monetary policy settings are 'appropriate', which would support the dollar.

Any further weakness in consumption could warrant a material reassessment of the outlook by the FOMC. Under our baseline, the FOMC would most likely start cutting interest rates again in 2020.

Our base case is that the FOMC will announce a taper in September if the August non?farm payrolls is strong, we anticipate the taper will be implemented in October or November, though the recent increase in Covid infections and deaths in parts of the U.S. may give Powell pause.

Unlike the Fed, we do not expect the ECB to shift away from its ultra?dovish monetary policy stance, we expect EUR to decline to a low of $1.12 in Q1 2022, before gradually appreciating.

The stronger the world economic outlook, the weaker the U.S. dollar, powell is going to make clear that they don’t see any near-term exit from their very easy policy stance, and that’s going to pull the dollar down.