US Fed monetary policy meeting starts today
The US Federal Reserve’s (Fed) 2-day monetary policy meeting starts today. Afterwards there will be a press conference with the Fed Chairwoman, Janet Yellen, who will talk about the state of the US economy. Market participants will prep themselves on the latest economic releases prior to the much-awaited event.
There’s not much scheduled economic news from the rest of the world today – nothing from the UK, but German producer prices have registered a decline for August. America will release its housing starts and building permits information, both for the month of August.
Pound Sterling – UK Markets
The Pound is trading lower against the US Dollar and the Euro this morning. With no domestic data points to track, market participants in the UK are look at macroeconomic news from other parts of the globe. There are a few economic releases scheduled for the end of the week though, including Britain’s public sector net borrowing, the CBI industrial trends survey data and the Bank of England’s quarterly bulletin report.
British Prime Minister Theresa May has held discussions with Wall Street banks and chief execs from the US technology and entertainment sector at the British
Consulate General in New York. Her purpose was to reassure them that Brexit will not damage their UK businesses. The PM also came down hard on European Union leaders who have been threatening Britain ahead of its Brexit negotiations. Today, she is scheduled to address the United Nations General Assembly and defend the Brexit vote.
US Dollar – US Markets
The greenback is trading mixed against the Pound and Euro this morning. Market participants will be monitoring the US housing starts and building permits data for August for further insight into the housing sector, but most attention will be paid to the US Fed’s monetary policy meeting, which gets underway later today. Recent soft economic data from the US has reduced expectations of a short-term interest rate increase.
Yesterday, the US Dollar declined against most of its major peers. The US NAHB housing market index recorded a higher than expected increase in September, notching its highest level in 11 years. This suggests that rising demand for new residential construction could boost the nation’s economy, and has given builders some confidence that low mortgage rates and a strong labour market will drive up sales.
Euro – European Markets
The shared currency is trading higher against the greenback and the Pound this morning. Data released earlier showed that prices of goods leaving German factory gates declined in August for the first time in 6 months. Energy prices, once again, came out as the main culprit in driving down the nation’s producer price index (PPI).
Yesterday, a report by Germany’s Bundesbank indicated that the Eurozone’s powerhouse economy would slow in the third quarter of this year - recent industrial production and trade figures from Germany have been disappointing, adding to evidence that the nation is losing momentum. This latest report is in stark contrast to its previous prediction.
In other economic news, the Eurozone’s construction output registered a strong growth in July, rising for the second consecutive month after 3 months of decline. It was also the highest growth recorded since January this year. The recovery in construction output was mainly attributed to France.
Other Currencies – Highlights
The Swiss Franc is trading on a stronger footing against the US Dollar this morning. This is due in part because Switzerland’s trade surplus widened in August, as the decline in imports exceeded that of exports, but also because the US Dollar is trading weak across the board.
The latest report from the Swiss Secretariat for Economic Affairs has stated that the Swiss economy has regained momentum. It expects the nation’s economic growth to gain pace next year as uncertainties about Britain quitting the European Union will have only a moderate impact.
The Swiss government has slightly upgraded its 2016 economic growth forecast. Switzerland’s GDP is expected to expand by 1.5% and 1.8% in 2016 and 2017 respectively. (This is in comparison to its June forecast of 1.4% and 1.8%).
Tomorrow will see the Swiss National Bank’s third quarter report.