The main event is the Fed meeting tonight

Market movers today

• The main event is the Fed meeting tonight. Given the recent market turmoil, the Fed is likely to reiterate the ‘considerable time’ forward guidance and the ‘significant underutilisation’ description of the labour market. We expect the Fed to end asset purchases as has been signalled by several members recently and we only see 30-40% likelihood of the Fed mentioning the possibility of QE4. We have changed our Fed first hike forecast from April to June next year due to the lower inflation outlook and slower growth outside US (for more see Fed preview: softer tone on inflation but bar for QE4 is high, 28 October).

• In the euro area the ECB’s Bank Lending Survey for Q4 is due for release. After the ECB’s Asset Quality Review and stress tests showed that supply side constraints on credit growth should be limited, it will be particularly interesting to see whether demand for credit and loans continues to increase. In Q3 demand for credit and loans increased but we could see some setback for enterprises in Q4 following the latest weakness in economic data.

• Norwegian retail sales and business and consumer confidence will be in focus in Scandinavia. For more on Scandi markets see page 2.

Selected market news

The European Commission has said it is likely to approve France and Italy's 2015 budgets after both countries made adjustments to their first proposals, submitted earlier this month. France said on Monday that it would cut its budget deficit next year by an additional EUR3.6bn, boosting the country’s structural adjustment efforts to above 0.5% as an update to the original draft budget. According to BBC EU Economic Affairs Commissioner Jyrki Katainen said ‘I cannot immediately identify cases of particularly serious non-compliance which would oblige us [to reject the plans]’. For further details see FT.

Deputy Governor of the Bank of England, Jon Cunliffe, said yesterday that softening in pay and inflation data ‘implies that we can afford to maintain the current degree of monetary stimulus for a longer period than previously thought’.

Japan's industrial production rose at its fastest pace in September since the beginning of the year with an increase of 2.7% m/m beating consensus expectations of 2.2%. It thus rebounded from the August reading of -1.9% decline and it is further evidence that the effect of the shock from this spring’s VAT hike is fading and that activity is lifting again as was also suggested by last week’s flash estimate for October manufacturing PMI. USD/JPY is little changed at 108.10 this morning but the Japanese stock index Nikkei has advanced 1.5% this morning.