Markets focus on Thursday’s FOMC decision with a quiet day yesterday – 15th September 2015

Malcolm Turnbull was sworn in this morning to replace Tony Abbott to become Australia’s fifth prime minister in eight years. Investors were not even slightly ruffled by the change of leadership. Perhaps that is because he and his New Zealand counterpart are both ex-investment-bankers.

It led to the Aussie Dollar sharing first place this morning, strengthening by 0.5% in early trading. The gain came against the backdrop of another losing day on the Shanghai stock exchange. The reason for the lack of reaction is that investors have their eye on Thursday’s Federal Reserve interest rate decision. It meant Sterling and the US Dollar are unchanged against one another.

Contrary to the rumours of fresh stimulus, which were doing the rounds last week, the Bank of Japan made no change to monetary policy this morning. The Yen strengthened on the news to take third place behind the Aussie and the South African Rand.

Monday’s few ecostats were unremarkable. Swiss retail sales were just about flat on the day, Italian inflation was steady at 0.2% and Euroland industrial production increased, for the first time in three months.

The most important ecostat today will be the monthly change in US retail sales. For the Euro, the figures to watch are German and Eurozone investor sentiment. Investors might or might not feel obliged to react to the UK inflation data this morning. Nobody is expecting UK consumer price index inflation to have been far from zero in August.

The US retail sales figures will likely be more important as consumer spending accounts for about two thirds of the US economy. Although a significant part of that expenditure goes on services, rather than shopping, the assumption will be that a strong figure today would support the argument for an early increase in interest rates by the Federal Reserve. The US Dollar could well react, whatever the number.