Quiet Markets Ahead of the FOMC

We saw relatively quiet markets throughout yesterdays trading as the market focus has moved squarely onto tonight’s meeting of the Federal Reserve Bank. As we said yesterday, it’s not so much whether they will hike rates, that’s well and truly priced in, but more on the outlook and how it’s planning on cutting it’s $4 trillion+ balance sheet and it’s future outlook on rates.

As this meeting has now taken on so much importance in the minds of market participants then we’re expecting to see a continuation of range bound trading up to this evenings session. The one major we may of course see some volatility in is the Cable which is still trading hard on the back of last week’s election result.

Looking ahead to the rest of today and we’ve got a fair bit of fundamental data out before we hit the Fed meeting much later in the day. First up in Asia, we’ve got Industrial Production data out of China with +6.4% expected, then into the London session and we have the important UK employment numbers out at 6.30 pm.

Into the US session and we have to get through the CPI and Retail Sales data at 10.30 pm which could provide a bit of volatility before eventually getting the main event at 4.00 am with the rate announcement, the FOMC Statement and then the press conference. The market is still leaning on the dovish side of things so the risk is sitting with a more hawkish outlook from the Fed which once again wouldn’t really be supported by the recent data.

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