Article / 16 September 2016 at 7:00 GMT

Morning Markets: Forecast is calm, also for Brexit




  • US August Consumer Price Index (1230 GMT)
  • US September U.Michigan Consumer Sentiment (1500 GMT)

It's a quiet day on the economic calendar with an absence of top-tier data. European equities are poised to open flat despite encouragingly positive leads both from Wall Street and Asia overnight.

The US dollar is broadly softer against a raft of currencies in line with fading hopes of a rate hike by the Federal Reserve next week. But flows were sluggish as several key Asian markets, including China, Hong Kong and South Korea, are closed for public holidays.

Today also marks a watershed in European Union history: the leaders of 27 out of the 28 members of the bloc will meet in Slovakia. The UK is the absentee that wasn't invited though it is still formally a full member of the EU. Brexit is one of only several items on the day's agenda and no progress at all is expected. Donald Tusk, president of the European Council, has repeatedly stressed that the ball is in the UK's court and it is up to it to propose divorce terms in its effort to extricate itself from the union. The UK, for its part, is still pressing for informal talks prior to triggering the 2-year Article 50 exit process, but is being blanked by the other states.

Finally today, the Russian central bank holds a policy setting meeting (and press conference) amid widespread expectations that it will cut interest rates for the second time this year. However, TradingFloor's Nadia Kazakova reckons that the bank might well confound expectations by holding policy steady. For one thing, she says, the inflation numbers that many believe would support a cut are not as benign as they seem at first glance.

Market signals

Asian session

  • Investors in wait-and-see mood ahead of Fed and Bank of Japan meetings next week
  • Crude oil gained overnight, despite fears of added supply from Libya and Nigeria
  • Overnight gains on Wall Street gave Asian investor sentiment a lift
  • Markets were closed in China and Hong Kong today for mid-Autumn festival holiday
  • Japan's Nikkei 225 headed higher in early trading
  • Australia's benchmark S&P/ASX200 rallied, helped by gains on Wall St
  • ASX200 was up 1.06% at 0600 GMT
  • Glenn Stevens finishes up as Reserve Bank of Australia governor this week 

Forex ahead

  • US dollar edged lower against the yen; it was worth just ¥102.0220 at 0530 GMT
  • Australian dollar managed to hold above 0.75, helped by gains for copper
  • Aussie dollar was worth 0.7511 at 0530GMT

From the Floor

Upside-down. Weaker-than-expected US retail sales were “celebrated with a massive risk-on rally. So we have upside-down markets that cheer bad data,” says Hardy.

Liking Nikkei. “We were long Nikkei before the selloff last Friday. We like to be long Japanese stocks,” says Garnry

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

It looks like a dull Friday ahead of the next week's Fed meeting, but US consumer prices could shift the last-minute odds of a rate hike, writes Juhani Huopainen.

Puzzle piece
Inflation is the missing piece of the puzzle for the Fed in its monetary policy deliberations, as the FOMC prepares to meet next week, explains Max McKegg.


Markets are keeping a close eye on Libya, after news that the Opec member nation plans to boost crude exports; the capital and largest city Tripoli is shown above. Photo: iStock

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