Fed previews:
- Welcome to Fed day
- Fed should not offer strong push back against recent market pricing - Citi
- Fed won't stir the pot but rate cut timeline may be faster than ECB - Commerzbank
- BofA sees Fed taking the first steps in conveying a dovish hold today
- Fed could struggle in convincing markets at today's meeting - TD
Headlines:
- UK October monthly GDP -0.3% vs 0.0% m/m expected
- Eurozone October industrial production -0.7% vs -0.3% m/m expected
- US MBA mortgage applications w.e. 8 December +7.4% vs +2.8% prior
- China November M2 money supply +10.0% vs +10.1% y/y expected
- Germany's Scholz says to stick with debt brake for 2024 budget
- Japan at a critical stage on whether it can emerge from deflationary mindset, says Kishida
- OPEC says recent drop in oil prices caused by "exaggerated concerns" about demand growth
Markets:
- CAD leads, NZD lags on the day
- European equities slightly higher; S&P 500 futures up 0.1%
- US 10-year yields down 2.1 bps to 4.185%
- Gold up 0.1% to $1,981.24
- WTI crude up 0.3% to $68.85
- Bitcoin up 0.2% to $41,169
It was a more tentative session as markets are waiting on the FOMC meeting later today before further committing to any moves this week. The dollar was steadier throughout, with USD/JPY keeping around 145.60-80 mostly while EUR/USD is little changed just under the 1.0800 mark amid large option expiries at 1.0790 on the day.
The pound was a decent mover though, with GBP/USD dropping from 1.2550 to 1.2510 after a softer UK monthly GDP data for October. That saw rate cut odds for March next year ramp up from 46% to roughly 68% currently, with UK bond yields also slumping to the weakest since May.
In other markets, equities were tentative after the gains from Wall Street yesterday while Treasury yields are just slightly lower with plenty still to play for later in the day.
It's all about the Fed next before we get to more major central bank meeting decisions tomorrow in Europe.