Market movers today
Key focus will be tonight’s FOMC meeting. It seems increasingly likely that the Fed will change its forward guidance away from the ‘considerable time’ language to something linked with the development towards its goals of full employment and inflation at 2%. It might put in some other soft language instead to avoid a too hawkish message. However, the economy is clearly moving in the right direction and the Fed will need more flexibility in its policy to raise rates earlier if necessary. Focus will also be on the new projections for the Fed funds rate, where we may see a move forward of the first rate hike as signalled by several Fed members. Finally, this meeting will have a press conference where Janet Yellen could adjust the tone if there is a strong market reaction after the statement and projections. The challenge for the Fed is that market pricing is still far below its current projections and it needs to try and adjust in a not too abrupt way. We continue to look for the first rate hike in April 2015 based on a continued robust recovery and strengthening labour market.
Before the Fed meeting a range of key figures is due for release: labour market report for July in the UK, final CPI data for August in the euro area and CPI and NAHB figures in the US.
Bank of England releases minutes from its 4 September meeting. Although the release might be overshadowed by the Scottish independence referendum tomorrow, it will be interesting to see if more MPC members have joined the hawkish camp after the August meeting had a split in votes with two members advocating a rate hike.
In Sweden, minutes from the Riksbank's 3 September meeting are released. For more on Scandi markets see page 2.
Selected market news
Bloomberg writes that China is injecting CNY500bn (USD81bn) into the nation’s largest banks, and although it has not been confirmed by Peoples Bank of China (PBoC), it signals the concern with the country’s economic slowdown. It is reported that the PBOC injects short-term liquidity into China’s five largest banks via its standing lending facility and that the recent run of weak production and money supply and lending data have opened up for the monetary stimulus.
Opinion polls on Scottish independence vote. Yesterday’s three polls (from Daily Telegraph, Survation and Scotsman) all put support for remaining in the UK at 52% with 48% backing independence, when undecided voters are excluded – and all suggested that support for a Yes vote was rising. However, the three polls gave differing estimates for the proportion of voters still undecided, ranging from 14% to 6%.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold reaches to all-time highs near $2,230, US PCE eyed
Gold price appreciates to all-time highs near $2,230 per troy ounce, attempting to continue its winning streak for the fifth successive session on Friday. However, trading volumes are light as market participants are likely observing Good Friday.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.