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Daily Briefing – Wednesday, September 20, 2017


Yesterday was a rather good day for US data, including comfortable increases in housing starts and permits, recovering some of July’s losses, and increases in import and export prices by a 14-month record spike. Current accounts increased 8.5% to a $123bn deficit in Q2. Today’s FOMC meeting will not be watched for signs of a changing interest rate, but the policies regarding the bank’s bond reinvestment plan. The FED’s balance sheet is now worth about $4.5tn, and plans are to reduce that by 30-40%. The consensus is that there is a 58% chance of a rate hike by the end of this year.



The Euro has been showing a weak upward momentum as German and EU economic sentiment rise steadily (7 points in Germany) and Sunday’s elections grow nearer. Chancellor Merkel is expected to win a 4th term, though who her partners are could influence refugee and econmic policies across the Eurozone. Traders yesterday had some moments of concern after the ECB council appeared to disagree on terms of ending quantitative easing. The richer hawks are ready to begin selling €2.3tn. worth of eurobonds, whereas the weaker countries, the doves, would rather see a slowdown in the rate of continued purchase. In Russia, President Putin has ordered legislation to be put in place by the end of the year whereby all trade at Russian seaports be in Rubles, not US Dollars – in retaliation against US sanctions.



Trading across Asia this morning was weak ahead of the US Fed meeting today. The KOSPI may have felt some preasure following Trump’s UN threat against the northern neighbor. The New Zealand dollar was slightly up as elections draw near. And Japan’s trade surplus overnight showed a better than expected drop to 113.6bn Yen on steadily increasing imports (+15%)and exports (+18%).



Oil is climbing again this morning after the API yesterday reported a modest 1.4mB increase in inventories. Gold was down for the 3rd day in a row as the USD shows some pre-FOMC strength. The metal began recovering in afternoon trading, however.



If FedEx is a sign of things to come, news is sombre: shares tumbled after reported EPS was 35c below expectations on revenues that missed by $100mn in Q1. The company is downgrading 2018 expectations due to the TNT Express cyberattack and Hurricane Havey. Microsoft was up 0.37% yesterday after announcing it was increasing dividends by 7.6% and that Pepsico CFO Hugh Johnston was joining its board.


Today’s Events


Germany: Producer Price Index

8:30 AM GMT

UK: Retail Sales


US FOMC Economic Projections & Interest Rate

10:45 PM GMT


2 AM GMT (+1)

Japan: BoJ Statement & Interest Rate

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