Despite the US data on Tuesday a September cut remains priced in

US data released Tuesday was strong, ICYMI summary here:

• Forexlive Americas FX news wrap 16 Jul. The shift into the Russell 2000 and Dow continues

Bank of Montreal cite a less hawkish Powell:

• A Fed cut in September remains effectively fully priced in even with consumption and imported inflation surprising on the upside.
• The price action reflected the fact that Powell has seen enough justification in Q2’s inflation profile to leave a Q3 cut as a reasonable assumption while the prospects of slower spending won’t be sufficient to spur the Fed into action in the very near-term (i.e. no cut on July 31st).
• A willingness to look beyond the final few June datapoints and consider the entire month’s (and quarter’s) data releases in aggregate was encouraged by Powell’s assessment on Monday. Progress has been made on the inflation front and balance has returned to the labor market – nothing learned on Tuesday changed this reality as core-PCE is still expected to print at +0.2% for June.

This article was written by Eamonn Sheridan at www.forexlive.com.