The wash up of market reaction to recent new looks has been a steady as it goes approach for the ASX 200 index today. Markets have digested news on Australia’s inflation data, the Fed meeting and Japan’s fiscal stimulus package and collectively decided that the balance of risk has not changed.

Australia’s CPI data came in largely as expected. This leaves a rate cut at the RBA’s August meeting as a live possibility but a line ball decision. The domestic economy has generated “non- tradable” inflation of 1.6% over the last year and the same annualised rate over the last 6 months. With the prospects of improved domestic growth, relatively steady commodity prices and some help form a Fed rate hike, it is at least arguable that the RBA could take a wait and see approach on inflation risks at this stage.

While the FOMC statement has been widely interpreted as “signalling” and preparing the market for more chance of a rate increase in coming months, the safest interpretation might simply be to take the FOMC statement at face value. The Fed has simply noted its view that “Near term risks to the economic outlook have diminished”. Presumably if that continues and no European banking crisis emerges in coming months the Fed could increase rates in December. If not it won’t.

The gold market rallied overnight preferring to be guided by a weak read on US durable goods than the Fed’s more upbeat economic assessment. Manufacturing and industrial production remains a stubbornly soft sector of the US economy. The latest durable goods data suggests little scope for improvement in the near term. Manufacturing is being held back by soft global demand; sluggish business investment and the growing tendency for consumers to spend on services rather than goods.

Investors have taken news of BHP’s Samarco impairment charge in their stride. The impairment reflects the costs of the previously announced agreement with the Brazilian government for remediation and repatriation of the damage done by the Samarco dam disaster. The wider question for investors is whether this will be enough in light of the various legal challenges currently underway in Brazil.