S retail sales came in slightly below expectations, while Empire manufacturing posted a bigger miss. Trading action since the announcement has been interesting with stocks falling and USD rising. This action is indicative of a hawkish reaction to the news which suggests that traders are seeing the news as not weak enough to knock the Fed off its path toward interest rate normalization.
Overall, US and European markets continue to consolidate with traders unwilling to make big commitments in either direction ahead of the Fed meeting. Even with the overhang of soft UK inflation, even GBP is holding pretty steady today. The top performing currency on the day has been JPY after the Bank of Japan indicated they expect the Japanese economy to rebound in Q3, curtailing speculation of an increase to its QQE program.
Crude oil has bounced back a bit today with WTI leading the rebound, which has also enabled CAD and NOK to rise moderately. This rebound comes even as mainland Chinese markets fell around 4% amid talk that the federal government has seized CNY 1 trillion in unspent funds from municipalities apparently in order to push the money into the economy and get delayed investments going.
US markets could be active later this morning around the industrial production report. Tomorrow brings UK employment and US consumer prices as Fed watch continues.
There are no major corporate announcements this morning
Significant announcements released overnight include:
Bank of Japan decision no change to interest rates or QQE as expected
US retail sales 0.2% vs street 0.3%
US retail ex auto and fuel 0.3% vs street 0.4%
US Empire manufacturing (14.6) vs street (0.5)
Germany ZEW current 67.5 vs street 64.0
Germany ZEW expectations 12.1 vs street 18.3
UK consumer prices 0.0% as expected
UK core CPI 1.0% as expected
UK retail prices 1.1% vs street 0.9%
UK producer input prices (13.8%) vs street (13.6%)
UK producer output prices (1.8%) vs street (1.7%)
UK ONS house prices 5.2% vs previous 5.7%
France consumer prices 0.0% vs street 0.1%
Norway trade balance NOK 20.8B vs previous NOK 23.8B
Eurozone trade balance €31.4B vs street €28.0B
Singapore retail sales 5.2% vs street 5.9%
Upcoming significant announcements include:
9:00 am EDT Canada existing home sales previous (0.4%)
9:15 am EDT US industrial production street (0.2%)
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