FX Markets Start the Week Stable, FOMC Rate Decision Awaited

Market Reviews

The financial markets remain steady at the beginning of the week, as traders are apparently turning more cautious ahead of FOMC rate decision and economic projections to be released later this week. Japanese yen and British pound remain the weakest. Canadian dollar and Swiss franc are the strongest ones.

On stock markets, Nikkei closed up 0.62% at 21506.88. Singapore Strait Times added 1.12%. Hong Kong HSI gained only 0.04% and China Shanghai SSE fell 0.03%.

Three central banks will meet this week (Fed, Bank of Japan and Bank of England). BoJ and BoE are both expected to stand pat. The US central bank is widely expected to raise federal funds rate by 25bps to 2.25-2.50% this week. The main focus are both the new economic projections and chair Jerome Powell’s press conference. Economists now expect the Fed to raise rates twice next year, not the three times they saw previously.

According to pre-released text, UK Prime Minister Theresa May will warn MPs against supporting a second referendum, saying it would do "irreparable damage" to British politics. She will also warn that “Another vote which would do irreparable damage to the integrity of our politics, because it would say to millions who trusted in democracy, that our democracy does not deliver. Another vote which would likely leave us no further forward than the last”.

The Eurozone will release CPI final data today. RBA minutes and German Ifo business climate index will be published tomorrow. Germany PPI data, UK CPI report and FOMC rate decision will be in focus on Wednesday. Central banks of Japan and England will announce rate statements on Thursday. UK Gfk consumer sentiment, Q3 GDP final and US Q3 GDP final will be released on Friday.