Thursday 17th September: European Open Briefing

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Thursday 17th September: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei up 1.20 %, Shanghai Composite gained 0.50 %, Hang Seng rose 0.80 %, ASX 1.30 % higher
  • Commodities: Gold at $1120 (+0.10 %), Silver at $14.86 (-0.15 %), WTI Oil at $47.15 (-0.05 %), Brent Oil at $49.80 (-0.20 %)
  • Rates: US 10 year yield at 2.28, UK 10 year yield at 1.95, German 10 year yield at 0.78

News & Data:

  • New Zealand GDP SA (QoQ) Q2: 0.4% (exp 0.6% prev 0.2%)
  • New Zealand GDP (YoY) Q2: 2.4% (exp 2.5% prev 2.6%)
  • Japan Trade Balance (Aug): JPY -567.9 Bln (exp JPY -540.0 Bln prev rev JPY -268.4 Bln)
  • Japan Imports y/y -3.1 % (exp -2.2 %, prev -3.2 %)
  • Japan Exports y/y 3.1 % (exp 4.0 %, prev 7.6 %)
  • S&P: Japan Ratings Lowered To 'A+/A-1'; Outlook Is Stable
  • PBOC Fixes Yuan Reference Rate At 6.3670 (prev 6.3712)
  • Asian stocks at three-week highs before Fed decision; dollar wary – RTRS

Markets Update:

There is broad USD weakness ahead of the FOMC meeting tonight. EUR/USD fell below 1.1250 support and hit a low of 1.1210, but quickly recovered from there. It reached a high of almost 1.1320 ahead of the NY close and spent the Asian session in a 1.1285-1.1320 range. GBP/USD rallied sharply after better than expected UK employment data. Overnight, it saw some slight retracement at the Sydney open, but eventually recovered and mostly consolidated between 1.5505 and 1.5520. USD/JPY got a boost from the equity markets. All major APAC indices are up on the day and USD/JPY rallied from 120.35 to 120.65. Price action is usually quiet ahead of the FOMC, but Initial Jobless Claims and housing market data at 13:30 BST might bring some temporary volatility.

As for the FOMC meeting tonight, most major banks expect the Fed to keep rates unchanged, with only a few predicting a rate hike. The market generally is also expecting no changes in interest rates and a rate hike would be quite a surprise to many participants.

Upcoming Events:

  • 08:30 BST – SNB Rate Decision
  • 09:30 BST – UK Retail Sales
  • 13:30 BST – US Building Permits
  • 13:30 BST – US Housing Starts
  • 13:30 BST – US Initial Jobless Claims
  • 15:00 BST – US Philadelphia Manufacturing Index
  • 19:00 BST – Fed Rate Decision
  • 19:00 BST – FOMC Statement
  • 19:30 BST – Fed Chair Yellen speaks

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