Good morning. As is usually the case of Fed Wednesdays, markets have quieted down and traded within a tight range only a few hours ahead of the FOMC statement. Both overnight markets saw a bit of data but it was largely ignored, looking ahead to today’s Fed statement. Chinese stocks rebounded a bit late in the session, stabilizing things and leading a more broad rally across Asian markets. China’s Shanghai Composite index gained 3.5%, snapping a three day losing streak on the hopes that authorities are prepared to act to prevent any further selloffs. The China Securities Regulatory Commission commented after Monday’s horrible decline that local governments would step up stock purchases and pledged new cash injections by the central bank. Yesterday, the same commission made it clear they would be investigating certain share dumping instances and finally today – some actual relief.
In Europe, sideways trading prevailed with only a bit of consumer confidence data to pace markets. Both German and French consumer confidence results were in line and EURUSD largely ignored these results, remaining pinned to Tuesday’s levels. Carrying the torch from Asian bourses, European indices were a sea of a green but it was more a lack of perceived bad news than anything else edging up stocks around the world. In North America, futures point to a positive opening as well as Wall Street anticipates a rosier outlook from the Fed. The pound Sterling remains one of the big winners this week, following better than expected Q2 GDP figures on Tuesday. Better than expected mortgage lending and approvals this morning kept GBPUSD elevated and is now testing its highest levels in over a week. As North American trading kicks off, things should tighten a bit now.
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