Wednseday 29th July: European Open Briefing

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Global Markets:

  • Asian stock markets: Nikkei down 0.05 %, Shanghai Composite lost 0.20 %, Hang Seng gained 0.15 %, ASX rose 1.05 %
  • Commodities: Gold at $1096 (-0.05 %), Silver at $14.68 (+0.25 %), WTI Oil at $47.80 (-0.40 %), Brent Oil at $53.10 (-0.10 %)
  • Rates: US 10 year yield at 2.26, UK 10 year yield at 1.95, German 10 year yield at 0.70

News & Data:

  • Japan Retail Sales 0.9 % y/y, Expected: 0.5 %, Previous: 3.0 %
  • Japan Retail Sales -0.8 % m/m, Expected: -0.9 %, Previous: 1.7 %
  • RBNZ Wheeler: Some further easing seems likely
  • RBNZ Wheeler: More Substantial NZD Depreciation Is Required
  • RBNZ Wheeler: Sees several risks around inflation outlook
  • Asia stocks up as China steadies, wary of Fed – RTRS
  • Emerging currencies feel pain of global stress – FT
  • China stems equity rout with state buyers – FT

Markets Update:

A quiet APAC session ahead of the FOMC. Asian equity markets are mixed, but the Shanghai Composite was quite stable today. In FX, NZD was the best performing currency amongst the majors, while the Aussie Dollar fell to 0.7317 and is down 0.20 % on the day.

The focus is on the Fed today. The FOMC meeting concludes in the afternoon and it will release the statement at 19:00 BST. There is no scheduled press conference and there will be no forecast updates. Almost all bank analysts expect the Fed to leave rates unchanged. They also see any large changes in the statement as unlikely, especially in a meeting without new forecasts and press conference. Given how oversold the commodity currencies are, there is a decent chance of a squeeze in pairs like AUD/USD, NZD/USD and USD/CAD. On the other side, should the FOMC deliver any significant hawkish surprise, the USD would rally and short EUR/USD, long USD/CHF would be the best trades for that scenario.

Upcoming Events:

  • 07:00 BST – German Consumer climate
  • 08:00 BST – Spanish Retail Sales
  • 09:00 BST – Norwegian Unemployment Rate
  • 15:00 BST – US Pending Home Sales
  • 19:00 BST – FOMC Statement
  • 19:00 BST – Federal Reserve Interest Rate Decision

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