Markets wait on Fed

Today's news headlines: 

‘UK pins hope on joining US, Mexico and Canada trade pact’. The UK is eyeing a move to join the United States-Mexico-Canada Agreement trade pact in an attempt to secure a trade deal with the US. The UK already has existing deals with Canada and Mexico so joining this pact will bring significant exposure to the US, something high on Boris Johnson’s priority list. However, the Biden administration isn’t as eager to drive this agenda through, as it battles with its own domestic policy. The move to join this deal is ambitious from the UK; the two sides aren’t aligned as one would expect, with the main divergence surrounding food standards. The benefits are up for debate, however, the likelihood of securing a deal seems to have faded since Biden came to power in January. (Financial Times)

‘Fed statement to be scrutinised for latest signals on taper timing’. The Federal Reserve is expected to keep major policy decisions unchanged at today’s meeting while mapping out the scale and speed of its taper plans in more detail. Analysts are expecting clear signals to be made on the fate of the $120bn per month bond-buying programme as the US Consumer Price Index hit 5.3% in August. Although conditions in the inflation space are providing good grounds for tapering, the inconsistencies in the labour market are being considered by the Fed and could have a knock-on effect on the scale of tapering that we see. (Financial Times)


Today

US markets failed to rebound yesterday after a heavy sell-off on Monday, with the Dow nudging 0.15% lower. Things were much more positive in the European session, with the FTSE 100 climbing 1.12% and the Euro Stoxx 600 closing 1.00% higher. Most major pairs are trading rangebound this morning as news from the Federal Reserve is eagerly awaited.

Events

Bank of Japan Interest Rate: -0.10% vs -0.10% previously
US Crude Oil Inventories: 3:30PM
US Federal Open Market Committee Economic Projections: 7:00PM
US Federal Funds Rate: 7:00PM
US FOMC Press Conference: 7:30PM


Interbank rates:

GBP/USD – 1.3649
GBP/EUR – 1.1642
EUR/USD – 1.1724
USD/CAD – 1.2779

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