NEWS / Foreign Exchange

Focus on the FOMC rate decision and statement tonight

We expect a neutral to hawkish stance signalling modest growth and concerns about continuously high inflation, but also that it is likely to moderate over time.

Overnight News Bullets

• SW Budget Balance (Apr) out at 30.0B vs. 7.2B expected.

• NO Industrial Production MoM (Mar) out at -1.5% vs. 0.6% expected. Manufacturing Production MoM (Mar) out at 0.9% vs.  0.3% expected.

• GE Industrial Production MoM/YoY (Mar) out at -0.1%/7.7% vs. 0.0%/8.2% expected.

• CA Housing Starts (Apr) out at 211.9K vs. 215.0K expected.

• US Wholesale Inventories (Mar) out at 0.3% vs. 0.4% expected.

• US ABC Consumer Confidence (Weekly) out at -3 vs. -5 prior.

• AU House Price Index QoQ/YoY (1Q) out at 1.1%/8.6% vs. 1.2%/8.1% expected.

• JN Leading Economic Index (Mar P) out at 40.0% as expected. 27.3% prior.

• JN Coincident (Mar P) out at 22.2% as expected. 30.0% prior.

Markets

• FX: USD higher ahead of FOMC, JPY coming back.

• Fixed Income: Fixed Income standing by for the Fed, ECB and BoE. JGB??™s droppping.

• Stocks: EU lower on bad earnings, US down on consumer concern. Nikkei up 0.5% today.

• Commodities: Precious metals dropped y??™day but has come back o/n. Crude rose y??™day but looks fragile.

O/N Data Heat map:

Calendar

Today's Highlights:

This and Next Week??™s Highlights:

What's going on?

• No major news releases lately. The market is awaiting the FOMC rate decision and especially the FOMC statement for rate guidance. We expect a neutral stance calling for modest growth and weakening inflationary pressures.

• Some talk about the Australian tax cuts, supporting the rate outlook and underpinning house prices. Bullish.

• Trichet hawkish in Dublin: want??™s to take interest rates higher to halt the Irish property prices.

FX

EURUSD momentum fading away