Fed signals low bar for September hike

The dollar extended its rally since the June FOMC meeting as the market priced increased chances of a September hike. The July FOMC statement highlighted the bar for hikes is not high with the Committee only needing to see "some further improvement in labor market improvement" before they will be comfortable raising rates. 

This validated and extended market pricing, and while weak Q2 wage data raised questions about a September hike, this is the most likely outcome. With Greek and China risks subsiding for now, this has refocused market attention on policy divergence again, providing a broadly USD-supportive environment. 

"The next two employment reports will be key in driving market expectations with a relative dearth of Fed speakers between now and September. A +200k print in the July report supports the September call", says RBC Capital Markets.