Global Markets:
- Asian stock markets: Nikkei up 0.20 %, Shanghai Composite fell 0.55 %, Hang Seng declined 0.20 %, ASX 200 rose 0.95 %
- Commodities: Gold at $1272 (+0.25 %), Silver at $16.88 (+0.65 %), WTI Oil at $46.00 (-0.95 %), Brent Oil at $48.35 (-0.80 %)
- Rates: US 10-year yield at 2.21, UK 10-year yield at 1.03, German 10-year yield at 0.26
News & Data
- China Industrial Production y/y 6.5 % vs 6.3 % expected
- China Retail Sales y/y 10.7 % vs 10.6 % expected
- China Fixed Asset Investment y/y 8.6 % vs 8.8 % expected
- South Korea Unemployment Rate 3.6 % vs 4.0 % previous
- New Zealand Current Account q/q NZ$0.24bln vs NZ$0.92bln expected
- New Zealand Current Account y/y -NZ$8.13bln vs -NZ$7.28bln expected
- New Zealand FPI m/m 2.4 % vs -0.8 % previous
Markets Update:
Volatility in the FX market remained low overnight. The main event was the release of Chinese industrial production and retail sales data. Both slightly exceeded expectations, but failed to support the local stock markets, which declined overnight.
Traders are waiting for the interest rate decision of the Federal Reserve. The probability is high that the central bank will increase rates tonight. The more interesting parts for traders will be the FOMC economic forecasts and statements. Due to the mixed US economic data in the past months, traders have become sceptical. The US Dollar should rally should the Fed signal that it remains confident in the US economy, and that two more hikes are coming this year.
GBP/USD recovered following yesterday’s higher than expected inflation data. The Bank of England will decide on interest rates tomorrow, and yesterday’s data is increasing the pressure on BoE Governor Carney and his team. GBP volatility should remain high today, as the UK will release its latest employment numbers this morning. Key resistance is seen at 1.2790/1.28.
EUR/USD continues to consolidate around 1.12, while USD/JPY is trading around 110. Price action is likely to stay quiet ahead of the FOMC meeting. AUD/USD and NZD/USD are consolidating as well, but USD/CAD is still seeing higher volatility following the hawkish comments from a BoC official on Monday.
Upcoming Events:
- 09:30 BST – UK Unemployment Rate
- 09:30 BST – UK Average Earnings
- 09:30 BST – UK Claimant Count Change
- 10:00 BST – Euro Zone Industrial Production
- 13:30 BST – US CPI
- 13:30 BST – US Retail Sales
- 19:00 BST – Fed Interest Rate Decision
- 19:30 BST – FOMC Press Conference
- 23:45 BST – New Zealand GDP
