All eyes on FOMC meeting

Monday, September 14, 2015

We received mixed Chinese economic data over the weekend which failed to provide a clear direction to the Asian equity markets. China’s retail sales surged 10.8% y/y in August, beating analysts’ expectations of a 10.6% rise. However, industrial production increased by 6.1% y/y in August, missing estimates of 6.5%. The Shanghai Composite index declined by over 2.6% towards 3,100, while the Hang Seng index gained slightly, by 0.15% after trading above 21,500.

Japan’s industrial production declined sharply by 0.8% m/m in July compared to a drop of 0.6% in June, while capacity utilisation fell 0.2% m/m in July from a 0.7% rise in June. The Nikkei index retreated by 1.63% towards 13,100, following the poor economic data.

European equity markets opened higher this morning, as the DAX, CAC, IBEX and London equity benchmark indices gained between 0.7% and 1%. Today, market participants will be keeping an eye on the release of the Eurozone’s industrial production. The euro hovered around 1.1350 against the USD, this morning.  

This week, the main focus will turn to the FOMC meeting on Thursday. The USD index has lost its upside momentum against the G10 currencies, retreating towards 95.0, as investors remain cautious about the timing of a US interest rate rise this year. We do not expect any big surprises from the US Fed this week, as it is likely that the US Federal Reserve Bank will leave interest rates unchanged this time, possibly signalling that the beginning of a tightening policy is approaching. The USD index could remain under further pressure ahead of the meeting, hovering around 94.0-96.0 against a basket of currencies.

USD index remains under pressure ahead of FOMC meeting

DXY Curncy (DOLLAR INDEX SPOT)   2015-09-14 09-04-12

EURUSD hovers around 1.1350 

EURUSD Curncy (EUR-USD X-RATE)   2015-09-14 09-07-06 

 

Events for today:

0630

CN

Aug

Retail Sales  (13/9/2015)

0630

CN

Aug

Industrial Production (13/9/2015)

1000

EZ

Jul

Industrial Production

 

All times UK Local Time

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