The uncertainty of how the Federal Reserve will lay out its stall on Wednesday will keep traders pensive over the next couple of days. However, we continue to be provided with evidence to say that the US economy is a relative outperformer. Subsequently, we still see any move to cut rates by the Fed will likely be precautionary with little need for an aggressive series of cuts. There are questions surrounding how many rate cuts are being priced in and whether it is too much. Friday’s solid Q2 Advance GDP print came in ahead of expectations, driven by firm levels of consumer spending. It means that tomorrow’s Consumer Confidence data will take on added importance to see if this trend will continue. However, a renewed trend of dollar outperformance is pulling on major markets and shows little sign of reversing ahead of the Fed meeting on Wednesday. EUR/USD is again eyeing key support, with Cable this morning breaking down to multi-year lows. On a day bereft of data, traders still have plenty to ponder for the days ahead. The resumption of the US/China trade talks will also be sure to feature.
Wall Street closed higher once more on Friday with the S&P 500 +0.7% at 3025. US futures are a shade lighter (-0.1%) and it is interesting to see the Nikkei slightly lower (at -0.4%) and the Shanghai Composite weaker by -0.2%. In European markets, the prospect of FTSE outperformance is elevated by a weaker sterling. FTSE futures are +0.1% wit