Article Highlights

  • FOMC member Brainard: Prudence needed before hiking
  • Brainard: Needs to see stronger consumer spending and inflation
  • New Zealand food price index up 1.3% in Aug
  • Japan’s BSI manufacturing index rose from -11.1 to +2.1
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The U.S. dollar returned some of its recent wins after an FOMC member’s testimony cast doubts on a September rate hike once more. Will they or won’t they?

Major Events:

FOMC member Brainard’s testimony – The lack of other top-tier data and the looming FOMC interest rate statement kept market watchers glued to Fed official Lael Brainard’s testimony in the U.S. session.

As it turns out, Brainard wasn’t feeling so hawkish just yet as she said that the central bank needs to exercise prudence before tightening monetary policy. “My main point here is that in the presence of uncertainty and the absence of accelerating inflationary pressures, it would be unwise for policy to foreclose on the possibility of making further gains in the labor market,” she noted.

Brainard also explained that she wants to see evidence of stronger spending before voting to hike, adding that the U.S. economy might be vulnerable to external risks. In particular, she mentioned weak foreign investment and consumption, particularly from China and emerging markets.

Major Market Movers:

USD – Brainard’s cautious remarks were enough reason for dollar bulls to retreat in Monday’s New York session.

EUR/USD climbed from 1.1230 to a high of 1.1268 (+0.34%), GBP/USD bounced off 1.3265 to 1.3337 (+0.54%), USD/JPY tumbled from 102.10 to a low of 101.58 (-0.51%), and USD/CHF dropped from .9741 to a low of .9690 (-0.52%).

Watch Out For:

  • 1:30 am GMT: Australia NAB business confidence
  • 2:00 am GMT: China industrial production y/y (6.2% expected, 6.0% previous)
  • 2:00 am GMT: China fixed asset investment ytd/y (7.9% expected, 8.1% previous)
  • 2:00 am GMT: Chinese retail sales y/y (10.2% expected)

See also:

London Session Recap

Asian Session Recap

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