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Attention remains on Fed policy despite last week’s meeting

  • CAD Wholesale Sales m/m: 0.0%
  • US Existing Home Sales: 5.31M
  • FOMC Member Lockhart Speaks
  • CAD BOC Gov Poloz Speaks
  • AUD HPI q/q: 4.7%

On a day when economic data was fairly lackluster, we saw plenty of commentary and comments about individual currencies and the state of the economy.

Starting with the UK we saw the Rightmove house price index post overnight. Asking prices for houses in England and Wales saw their biggest rise in the month to mid-September for 13 years due to cheap borrowing and a lack of properties on the market. The Rightmove survey follows other signs that Britain's housing market is heating up again.

Yesterday there was some big forecasts on currencies. Firstly,  UniCredit, Italy’s largest lender are suggesting that GBPUSD will push above 1.6500 by the end of Q1 2016. Meanwhile, Goldman Sachs Group Inc. says the EUR/USD may fall up to 10 cents as the European Central Bank is set to increase its QE measures to meet its inflation target. The current QE program is due to run until the end of September 2016. However, there have been signs that this could be extended through to mid-2017.

After the European markets closed, we saw the US Dollar strengthen after comments from Fed officals. It should be noted that over the weekend, three policy makers separately explained their rationale for enacting a rate increase at one of the Fed’s two remaining meetings of 2015. San Francisco Fed President John Williams, a policy centrist who has worked closely with Chair Janet Yellen, said on Sunday that “in my mind, it was a close call” to delay a rate rise at last week’s Federal Open Market Committee meeting. Yesterday, momentum continued to grow as Atlanta Fed President Lockhart said “I don’t believe a rise of a quarter point would have a significant effect on the economy”. He went on to say it is not a big risk to delay “lift off” by a meeting or two. This puts a 2015 interest rate hike back on the table as there are only two meetings remaining this year. 

  • CHF Trade Balance
  • UK Public Sector Net Borrowing
  • UK MPC Member Shafik Speaks
  • US FOMC Member Lockhart Speaks
  • CNY Caixin Flash Manufacturing PMI

The calendar is fairly quiet again today with the public sector borrowing numbers and the CBI industrial orders set for release from the UK. Meanwhile there are second tier manufacturing numbers in the US. Additionally, Atlanta Fed President Lockhart is once again speaking.