Deutsche Bank economist Antje Praefcke said in a note that if the Federal
Reserve’s decision leads markets to pare back expectations for rate hikes later
this year, the US dollar could weaken. A Fed statement or Chair Kevin Warsh’s
press conference may signal that inflation risks are controllable and temporary.
With recent falls in energy prices and June inflation undershooting forecasts,
Warsh is unlikely to adopt an extreme hawkish bias toward additional tightening,
making dollar upside driven by stronger rate-hike expectations less likely.
