This morning finds stocks in North America and Europe trading up slightly. The FTSE and DAX are both up about 0.5% while US index futures are up 0.3%.
Crude oil has dropped back a bit on no news in volatile but still range bound trading. Seasonal shifts continue to play out, with natural gas up 1.6% heading into winter heating season while gasoline is down 0.6% as summer driving season winds down.
Currencies are mixed today with CAD and GBP down slightly against USD, gold and JPY steady while EUR and AUD are up slightly.
Traders appear to be reluctant to commit to a direction with a two-day Fed meeting starting today, culminating in tomorrow's big rate decision, statement, member projections and press conference.
While the street and I both think the Fed will hold off on a rate hike but signal toward an increase in December, given all the hawkish talk of late there still remains a sizeable enough chance of a surprise increase that traders should remain wary, particularly after so many got caught offside following the Brexit vote back in June.
Traders also await the Bank of Japan's meeting tonight. It's been a few months since it introduced negative interest rates. Following a summer review, and with Japan's economy still struggling, the Bank of Japan is expected to bring in new stimulus measures this meeting.
US traders will likely be watching this decision closely. As with the ECB, a big stimulus move would make it more difficult for the Fed to raise rates, while less than expected or no new stimulus would clear the runway for the Fed to act.
In terms of JPY, because of its role as a safe-haven the yen has been going up on stimulus instead of down as would usually happen. Because of this, we could see significant swings in both directions on the news regardless of what transpires. Don't forget that as an exporting nation, the Nikkei often trades in the opposite direction of JPY.