Analysts at TD Securities are expecting the U.S. Federal Reserve to cut rates by 25 bps and leave the door open to further easing at its September meeting.

• “The dot plot should reflect a number of FOMC voters projecting 75bp of total cuts this year, but not enough to move the median lower to that level. Presidents George and Rosengren should dissent again at the meeting.
• Rates: The market is fully priced for the 25bp cut. Given that the market is pricing in additional 60bp of cuts by end-2020, forward guidance will be key. Our base case is one of disappointment, resulting in a bear flattener.
• FX: Focus on dot plot. But, unless the Fed provides a firm dovish surprise, the USD should trade with a firm bid tone. EURUSD likely re-challenges 1.0925 key support. USDJPY to remain in broad 107/109 range but upside risk.”