Themes

• General mood is “risk off”
• Tight ranges on currencies; weaker Chinese data largely shrugged off
• All eyes remain on tonight’s FOMC meeting

What’s Moving

As expected, a fairly quiet session on currencies in Asia today, with all majors holding tight ranges and within overnight extremes. USD/CAD had another test of the overnight highs, but sellers emerged to protect the high and the pair fell slightly.

Slightly weaker than expected data out of China was largely shrugged off today, with players ignoring the numbers to instead focus on tonight’s FOMC meeting. Chinese Retail Sales (3.9%) and the Chinese Unemployment rate (5.0%) were both weaker than expected.

Data tonight sees:

• U.K. CPI (E: +4.8%)
• Canadian Housing Starts (E: 236k)
• Canadian CPI (E: 0.2%)
• U.S. Retail Sales (E: +0.8%), and
• U.S. Empire State Manufacturing Index (24.0)

Although the main focus tonight will be on the FOMC meeting. The Fed is not expected to change rates, but the market is expecting a hawkish tone to inflation and an increasing of the tapering program. The USD has held quite strongly over the last fortnight, but a dovish Fed could completely change the trend.