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Markets Tread Water Ahead of FOMC

FOREX

CNY outperformed, with USD/CNY gapping to, and staying at, the lowest levels since H1 2019 on the better-than-expected industrial production and retail sales releases. Market focus turns to the next raft of PMI data due on September 30th.

GBP also traded well, rising against most others in G10, as pessimism surrounding the UK government's Internal Market Bill subsided further. The Times reports that the PM has signaled to lawmakers that he is prepared to compromise over plans that breach international law. GBP/USD touched 1.2925 before pulling off the best levels. The single currency traded poorly, with EUR/USD edging off a new weekly high well ahead of the NY close.

The FOMC rate decision on Wednesday takes focus for markets, although analysts see little chance of material change in Fed policy after they announced the results of their policy framework review at Jackson Hole.

UK and Canadian inflation, Japanese trade balance, US retail sales and the Brazilian central bank rate decision also cross. The Brazilian central bank are seen keeping rates unchanged at 2.00%.

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