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Markets eagerly await tonight’s pivotal FOMC statement

  • UK Prelim GDP q/q: 0.7%
  • CAD RMPI m/m: 0.0%
  • US CB Consumer Confidence: 90.9
  • JPY Retail Sales y/y: 0.9%

It was another volatile day yesterday as the UK and US both released high tier data during the session and Chinese markets took another hit overnight. Firstly, China’s Shanghai Composite Index closed down 1.7% after another volatile session that saw the index decline as much as 5.1% before clawing back a 1% gain and then finishing on -1.7%. The current sell off is mirroring the 1929 Wall Street crash as the Chinese government continues to try and simmer down the situation.

Closer to home, the UK released its preliminary GDP number which met the economists’ consensus of 0.7%. UK economic growth accelerated in Q2 as business services and finance strengthened, giving growth a healthy boost and its 10th consecutive expansion. GDP has returned to the average pace of the previous two years after last quarter’s slowdown. The UK economy is looking healthy and despite failing to exceed expectations the figure was seen as a positive sign by markets and the Pound rose across the board after this release.

Across the pond, the US released its CB consumer confidence figure. The reading missed expectations and posted a 90.9 figure,  its worst reading this year. The absence of larger pay rises has kept US consumers cautious, retail sales also fell 0.3% in June leading to a decline in confidence in the world’s largest economy. 

  • EUR Gfk German Consumer Climate
  • UK Net Lending to individuals m/m
  • US Pending Home Sales m/m
  • US Crude Oil Inventories
  • US FOMC Statement
  • US Federal Funds Rate

Much of the focus will be after the European markets close with the conclusion of the FOMC meeting and statement. With no meeting due in August the market will be looking to decipher the statement for clues on rate policy. The market is starting to lean towards September as the long awaited “lift off” date for a rate hike. Data has been positive so it will be interesting to see if the FOMC acknowledge this.