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Phil Dobbie and NAB’s David de Garis discuss what was said in the press conference that followed the announcement and how the market has reacted. Plus a rise in oil prices, a UK rate rise now looking more certain and the progress of the New Zealand economy.

The FOMC this morning announced as expected the formal start to winding down its balance sheet to commence next month.

Why we forecast – it’s the turning point that matters

RECENT updates

The FOMC this morning announced as expected the formal start to winding down its balance sheet to commence next month.

US President Trump’s 40 minute address to the UN, in which he described N. Korea leader Kim Jong UN as “Rocket man on a suicide mission for himself and his regime” has given us a (predictable) song title but frankly not much else.

GBP and CAD pull back on latest BoC and BoE utterances, helping USD move ahead again aided too by modestly higher US Treasury yields (10s +2bps to 2.23%). This pulls AUD comfortably back below 0.80. It has already traded – intra-day – through last week’s 0.7956 low.

Why we forecast – it’s the turning point that matters

Another day on and the Pound has again been the star performer in the currency markets.

While the market’s focus was expected to be primarily on the US CPI print for August, there was much more market action across the Atlantic with the Pound soaring on the back of a near term rate rise warning from the Bank of England.

While equity markets had a day of consolidation, the USD and US Treasury yields had a decent move higher aided by increasing hopes over US Tax reform.

Yesterday’s song title was Start me up by the Rolling Stones and it still seems an apt description with the risk‑on tone continuing overnight.

A broad risk on rally that started in the Asia continued overnight driven by expectations of a lower damage bill from Hurricane Irma and the absence of geopolitical headlines with North Korea not launching an ICBM on Saturday as many had feared it would.

What does the Bank of Canada mean for the RBA?

USD indices closed in negative territory on Friday, but managed to recover a bit of ground in the overnight session, thanks to a rise in UST yields and a softer CAD after a mixed employment report.

I don’t care, I love it was the electro pop song of 2012. So it was with the market reaction to the ECB meeting overnight with the Euro higher (+0.9% to 1.2023) and German Bund yields lower (-4.0bps to 0.31%).

The ancient English nursery rhyme was used allegorically in George Orwell’s 1984 to foreshadow the death of true knowledge (and so the advent of fake news, some 50 years before the Simpsons in 2001 foretold of Donald Trump’s ascendency to the US Presidency).

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