Article / 27 July 2016 at 7:00 GMT

Morning Markets: Waiting for news on US rate moves



  • Germany: Gfk Consumer Climate Index (0600 GMT) 
  • EU: Monetary developments in the euro area (0800 GMT)
  • UK: Gross Domestic Product: Preliminary Estimate  (0830 GMT)
  • US: Durable Goods Orders (1230 GMT) 
  • US: EIA Weekly Petroleum Status Report (1430 GMT)
  • US: Federal Reserve FOMC Statement & Interest Rate Decision (1800 GMT)

Obviously today markets are very eager to hear any signals from the Fed regarding a rate hike later in the year. As for now rates are expected to stay stable. Saxo's fixed income trader Michael Boye pointed out yesterday, the chance for a Fed rate hike has increased again to pre-Brexit levels. The Federal Open Markets Committee meeting on Wednesday is the centrepiece of the trading week in FX and fixed income. 

John J Hardy, head of FX strategy at Saxo Bank, had already said that “expectations are for a mildly hawkish message,” and added that Fed is preparing for a possible September or December move and it will aim to avoid making such moves as surprise. In a few hours we will know more.

For years Germany's economy has been one of the strongest within the EU. Now some fear that the recent string of terror attacks will dent economic growth? No one knows the answer at this point, but the subject has become topical as the nation tries to make sense of a series of violent attacks. 

The real test will come in the weeks and months ahead. Meantime, today’s Gfk update on sentiment will provide a reading on the mood in recent weeks. Note that the Consumer Climate Index has been rising in recent months, reaching an 11-month high of 10.1 in last month’s release.’s consensus forecast calls for a mild dip in CCI to 9.9 in today’s report. But that still leaves the index at an elevated level compared with recent readings.

After the Brexit vote the UK GDP and other figures are watched very closely as those could signal how the UK is expect to fare during the process of leaving the EU and afterwards.

In the US demand for durable goods has been hinting at a recovery in recent months in year-on-year terms, but today’s update is expected to deliver another setback in the monthly comparison.’s consensus forecast sees headline orders slumping 2.2% in June, which will mark the second monthly decline. Even worse, the projected decline will pull the year-on-year trend back into the red for the first time since March.

Market signals

Asian session

  • Australia's June quarterly CPI data came in at 0.4%; the March figure was minus 0.2%
  • Headline inflation was 1% year on year, broadly in line with expectations
  • Core annual inflation was 1.7%
  • An RBA rate cut next week is still considered likely
  • Asian shares opened higher across the board
  • The Nikkei rebounded after Tuesday's sell-off, surging 2.3% after report of ¥ 27tn stimulus
  • After being positive much of the day, Australian stocks went negative towards the close

Forex ahead

  • JPY early gained 1.7% against the dollar 
  • Report of greater than expected stimulus then boosted USDJPY as high as 106.53
  • AUD rose half a cent to 0.758, then steadied to 0.752 after CPI data release
  • AUD then fell back to 0.7458 after report of Japanese stimulus 

From the Floor

Ambiguity continues. "No one seems to agree on what the Japanese stimulus package actually contains," says Moltke-Leth

Good but not good enough? "This is not the turnaround for Deutsche Bank," says Garnry 

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

In opinion

The German Consumer Climate Index monthly update is tipped to see a slight fall ahead of any fallout from recent terror attacks, writes James Picerno.

Loonie logic
If USDCAD traders are to be believed, the only thing that Canada has going for it is oil. But Michael O'Neill explains those traders are wrong. There is more to Canada than oil.

Below par
The trend suggests a period of inflation lower than the RBA target range is setting in, writes Max McKegg.

Wait and see
Markets were range-bound ahead of the run of central bank meetings, writes the Saxo APAC Sales Trading team.


For US rates currently the only way is up. The question remains though, when the next step 
is due. Today we might receive signals from the FOMC. Picture: iStock

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