From David Scutt, Treasury Dealer at Arab Bank, here’s what the Australian market will be looking ahead to over the coming day.
The ASX 200 looks set to end July with modest gains with SPI futures pointing to an increase of 7pts on the open. Despite heavy losses in base metals prices overnight, given the materials sector has outperformed over the month, it’s unlikely that it’ll drag too much on the index today given likely window-dressing.
Having nosedived yesterday following weak building approvals and dovish language from RBA Governor Glenn Stevens, the AUDUSD has stabilised overnight with the pair trading in a thin range between .9045 and .9101. With far bigger events ahead, we expect much of the same today as participants bide their time before the FOMC meeting later on this evening. Support is found at .9050 and .9000 with selling likely to resume on any attempt above the .9100 level.
Australian private sector credit data for June will be released at 11.30am. Markets are looking for a now-customary increase of 0.3%.
Regional releases today include manufacturing PMI, construction orders and housing starts from Japan, NBNZ business survey in New Zealand along with Taiwan Q2 GDP.
The US Federal Reserve’s FOMC will hand down their July monetary policy decision at 4am tomorrow morning. While they’ll keep rates unchanged at 0-0.25% and their asset purchase program steady at $85bn per month, all attention will be on the accompanying monetary policy statement with market participants set to scour the document for any clues as to when the committee intend to taper asset purchases. While many believe the FOMC will outline the prospect of near-term tapering, with unemployment holding steady at unacceptably-high levels and inflation half the level targeted, it wouldn’t surprise to see them maintain their dovish bias until they next meet on September 17-18.
Aside from the FOMC decision, markets will also have to navigate their way through Q2 GDP, ADP employment, Chicago PMI and MBA mortgage market index in the US, unemployment data from the Eurozone, Germany and Italy, CPI from the Eurozone and Italy, German retail sales, French consumer spending along with Canadian GDP.
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