The Bank of Japan starts its two-day monetary policy meeting

Market movers today

• The key event today will be the FOMC meeting, with the announcement at 20:00 CET, and Janet Yellen's press conference at 20:30 CET. We expect no change to the fed funds target range, but instead expect the Fed to announce it will begin reducing its balance sheet (‘quantitative tightening') in October. We have got most details about how the Fed wants to do this and hence we do not expect the announcement itself to have a major impact on markets, although we are still missing details about what level of the balance sheet the Fed targets in the long term. With respect to the ‘dots', we expect the signal to remain unchanged at one more hike this year and three next year. We do not expect any major changes to the statement despite low inflation, as the statement already says the Fed is monitoring inflation ‘closely'. For more information, see FOMC preview: Fed to announce QT and still signal one more hike this year, 15 September 2017.

• In the UK, retail sales for August are due out. Retail sales are very volatile on a monthly basis, but we will look for signs of whether private consumption growth remains weak due to the negative real wage growth and lower consumer confidence.

• The Bank of Japan (BOJ) starts its two-day monetary policy meeting and is expected to announce its decision tomorrow around 05:00 CET. We expect it to keep its ‘QQE with yield curve control' policy unchanged. It is widely expected that the BoJ stands pat this time and the announcement should not have any significant impact on price action.

Selected market news

Although US President Donald Trump's speech to the United Nations General Assembly yesterday was hard on the rhetoric – in particular against North Korea – financial markets remained relatively calm. US equities ended the day slightly higher and in Asia this morning, Chinese and Japanese equity indices are also trading higher while most other regional indices trade lower. With little in the data calendar today, we are probably in for another quiet session as investors await the FOMC meeting and Janet Yellen's speech tonight.

In an interview with the Guardian, UK Foreign Secretary, Boris Johnson, last night rejected yesterday's reports saying that he could resign from the cabinet if in her speech in Florence on Friday Prime Minister Theresa May lays out a version of Brexit in which the UK pays to have access to the single market on a permanent basis – something similar to Switzerland's agreement with the EU. It remains uncertain what Theresa May will signal in her ‘update on Brexit negotiations so far' on Friday, and the event will attract a lot of attention in the financial markets, as this speech was the main reason why this week's Brexit negotiations were cancelled.

Japan recorded a higher-than-expected trade surplus in August, data released overnight showed. Both imports and exports are expanding by double-digit growth rates (15.2% y/y and 18.2% y/y, respectively) indicating that the momentum in the Japanese economy is strong and still driven by net exports.

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