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Will the FOMC stun the markets tonight?

  • EUR M3 Money Supply y/y: 4.9%
  • UK Prelim GDP q/q: 0.5%
  • US Core Durable Goods Orders m/m: -0.4%
  • US Durable Goods Orders m/m: -1.2%
  • US CB Consumer Confidence: 97.6
  • AUD CPI q/q: 0.5%

UK GDP and US durable goods dominated market headlines yesterday, as economist’s gained an insight into the health of both economies before tonight’s much anticipated FOMC statement. Firstly, economic growth in the UK cooled, due to manufacturing contracting for its third straight quarter and another lagging performance from the construction industry. UK GDP slowed down to 0.5%, missing expectations and down from 0.7% on the previous quarter. Although, Sterling depreciated after this release, losses were capped as UK output continues to outperform other major economies.

Across the pond, US core durable goods disappointed economists’ as the figure fell to its lowest level in eight months at -0.4%. Core durable goods excludes the volatile aircraft orders which can severely distort the underlying trend. The auto industry surprisingly was one of the few bright sparks again, with orders snapping back 1.8% after August’s decline. Widespread manufacturing softness has once again hurt the US’s secondary sector. 

  • US Goods Trade Balance
  • US Crude Oil Inventories
  • US FOMC Statement
  • US Federal Funds Rate
  • NZD Official Cash Rate
  • RBNZ Rate Statement

The focus of the day will be on the FOMC meeting this evening.  Whilst no change is expected it will be the statement that will attract the most attention. Much has been debated on the timing of “lift off” but the expectation has continued to be delayed. With various members continuing to state that 2015 could be still on the cards, the market has other dates in mind. The statement will be deciphered for clues on this matter.