Markets Poised Ahead of Big Week
US markets took a bit of a breather on Friday as investors look ahead to an event packed week ahead topped by the latest update from the Federal Reserve. All three major US indexes experienced a lacklustre day on Friday, the Dow and S&P closing close to flat and the Nasdaq dropping 0.22%. Currencies stuck to familiar ranges with the dollar gradually pushing higher and US treasuries just ticked up. Oil prices jumped again with the WTI up 1.8% and Brent up 1.8%. Gold dropped off to close around the $1,960/oz level.
Central Banks to Dominate this Week
Investors are preparing for updates from three of the major central banks this week and although few expect any surprises with the actual interest rate change, many are expecting volatility around the events as the banks pass on vital forward guidance. The Fed is of course top of the list for market impact but only the very brave – or those out to make a name for themselves – are calling for anything but a 25bps hike, the betting at 99.8% on that outcome. The ECB are also expected to come through with 25bps with the BOJ maintaining its ultra-low-rate environment, but it is the information that we get from the statements and press conferences that should really see some moves in the market and longer-term FX traders are poised to take advantage of potential interest rate differentials moving forward.
PMI Monday to Kick off the Week
There is a glut of Purchasing Managers Index (PMI) data due out across the market today and the Asian session kicks off with the Australian number early in the day. The European day sees the French, German, European and UK numbers all set for release and the US session will see the data out of the states released early in the day. As usual, the Services data is expected to outstrip the Manufacturing number, but traders are preparing to see moves if data is significantly away from expectations.
