Lars Christensen
Danske Bank A/S
Market movers today
Only tier-2 data on the agenda today. The US Empire survey will give a first clue about business confidence in September. It is expected to still be at a robust level of 15. Industrial production data for the US are expected to have risen 0.3% m/m in August.
Developments in the Ukraine crisis will continue to be in focus and the Scottish referendum will attract more attention as we head towards the vote on Thursday 18 September. Polls are pointing in all directions at the moment and the campaign on both sides is likely to intensify even further this week.
The Fed meeting on Wednesday will also be in focus. We see a 50-50 chance of a change to the forward guidance, as retail sales Friday provided yet more news that the economy is gaining strength.
Selected market news
The global stock markets are off to a shaky start to the week. On Friday the major US stock market indices declined moderately and this morning the Asian stock markets are mostly trading lower. Stock market investors are worried that the Federal Reserve as this week’s FOMC meeting might change its communication to a more hawkish stance.
These expectations come on the back of better-than-expected US economic data in recent weeks and it is clear that a rate hike from the Fed is moving closer. This is also visible in the US bond markets, where yields continue to rise on expectations of a rate hike sometime next year.
The US dollar continues to rally – driven by expectations of a more hawkish Fed. The strengthening of the dollar and higher US bond yields hurt Emerging Markets’ currencies and we could easily see more volatility in these currencies if the strengthening of the dollar continues.
Commodity prices are also trading lower this morning on the ‘Fed fears’ and worries about Chinese growth.
As expected, the left won Sunday's parliament elections in Sweden. The Social Democrats leader, Stefan Löfven, will now try to form a coalition government. In that regard, it should be noted that the leftist parties do not have an outright majority in the Swedish Riksdag and Löfven will therefore have to seek support from one or more of the centre-right parties. The anti-immigrant party, the Swedish Democrats (SD), did well at the elections, winning 13% of the votes. The centre-right as well as centre-left have ruled out cooperation with SD.
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 retreats below 1.0700 as USD rebounds
EUR/USD lost its traction and retreated slightly below 1.0700 in the American session, erasing its daily gains in the process. Following a bearish opening, the US Dollar holds its ground and limits the pair's upside ahead of the Fed policy meeting later this week.
USD/JPY recovers toward 157.00 following suspected intervention
USD/JPY recovers ground and trades above 156.50 after sliding to 154.50 on what seemed like a Japanese FX intervention. Later this week, the Federal Reserve's policy decisions and US employment data could trigger the next big action.
Gold holds steady above $2,330 to start the week
Gold fluctuates in a relatively tight channel above $2,330 on Monday. The benchmark 10-year US Treasury bond yield corrects lower and helps XAU/USD limit its losses ahead of this week's key Fed policy meeting.
Week Ahead: Bitcoin could surprise investors this week Premium
Two main macroeconomic events this week could attempt to sway the crypto markets. Bitcoin (BTC), which showed strength last week, has slipped into a short-term consolidation.
Five Fundamentals for the week: Fed fears, Nonfarm Payrolls, Middle East promise an explosive week Premium
Higher inflation is set to push Fed Chair Powell and his colleagues to a hawkish decision. Nonfarm Payrolls are set to rock markets, but the ISM Services PMI released immediately afterward could steal the show.