We enter the last trading week of the month with a 2 day FOMC meeting to contend with. It’s unlikely that the Fed will strengthen its language so as to signal a September hike, but naturally the markets will scrutinise the statement for any signs that the Fed is shifting in that direction. The dollar performance has been mixed Friday and during the overnight session, weakening against the single currency, yen and Canadian dollar, whilst strengthening against most emerging market currencies. Once again, the lottery that is the Chinese stock market has slumped overnight, down by around 7%. Whilst the correlation between this, the Chinese economy and other stocks markets is tenuous at best, the continued volatility is not helping risk sentiment in both currencies and commodities.
The distractions for today include the German IFO business sentiment data at 08:00 GMT, together with money supply and lending data for the Eurozone at the same time. US durable goods data is seen this afternoon. On the charts, the USDCAD continues to look interesting on the move above the 1.30 level, which was sustained on a closing basis on Friday. GBPJPY also looks interesting, having fallen for 6 of the past seven sessions. The Aussie is also at new lows for the year against the US dollar, with the China backdrop not helping matters and the break below the 0.73 level seen on Friday having largely been sustained today.