05 July 2018 ( Lagos ) : Away from the political trade tensions, traders will be looking closely at the Fed minutes scheduled for release later today. In his last press conference, Fed Chairman Jerome Powell was optimistic about the U.S.’s economic performance. He expected gradual increases in the federal funds to resume, given the low unemployment levels and accelerating inflation. 

However, investors are keen to know whether the imposition of trade tariffs and similar reactions from trading partners will threaten his outlook. On a different note, the dollar has appreciated 6.8% since its February lows. Such strength is expected to have a negative impact on price levels and exports. 

Meanwhile, the yield curve has continued to flatten over the past several months, increasing the risk of a recession. These factors have been ignored by the Fed so far, so today we will get to know whether any of these risks will hinder the Fed’s policy path, and whether the dollar will move accordingly.

On the data front, the U.S. ADP employment report is expected to show that 190 thousand jobs have been added to the economy, while the ISM non-manufacturing PMI for June is anticipated to retreat slightly to 58.3, down from 58.6 in the previous month.

Source: Hussein Sayed, Chief Market Strategist at FXTM

Reporting for EasyKobo on Thursday, 5 July 2018 in Lagos, Nigeria