The US Federal Reserve is seen holding the target range for the federal funds rate steady at 0-0.25 percent at the end of its two-day meeting on Wednesday, with investors eager to hear if the central bank will begin withdrawing stimulus this year as the economy rebounds. Fed Chairman Jerome Powell assured markets the central bank would take a measured approach to tapering bond purchases, but several policymakers have been calling for early tapering despite the recent slowdown in inflation numbers.
On the economic data front, notable publications include building permits and housing starts, the flash Markit PMI survey, second-quarter current account, new and existing home sales, Chicago Fed National Activity Index and NAHB Housing Market Index.
In the meantime, Canadians head to the polls Monday to elect the country’s 44th parliament after Prime Minister Justin Trudeau called a snap vote two years early. Polls show Trudeau's Liberals are in a statistical tie with Erin O'Toole's Conservatives, while the left-leaning New Democrats under Jagmeet Singh are in third with about 20 percent support.
Important data to be released in America include Canada retail sales and new house prices; Mexico mid-month inflation; Brazil current account; Argentina second-quarter GDP and unemployment rate. The central bank of Brazil will probably hike interest rates by 100bps when it meets Wednesday.
Across the Atlantic, policymakers in the UK will also be deciding on monetary policy, after a higher-than-expected inflation rate in August and upbeat labor market figures reignited concerns about a sooner-than-expected policy tightening by the Bank of England. Key data to follow include Gfk consumer confidence, flash Markit PMI data, public sector net borrowing, and the CBI gauges for factory orders and retail sales.
Elsewhere in Europe, central banks in Sweden, Switzerland and Turkey will probably hold interest rates at current levels; while Norway is seen raising them off 0 percent, becoming the first of the G10 group of developed economies to do so. Investors will also turn their attention to the Eurozone's flash readings of Markit PMIs and consumer sentiment; Germany producer prices and business climate; France and Italy industry confidence; Spain and Switzerland trade balances; and Netherlands and Turkey consumer morale.
In the Asia-Pacific region, the Bank of Japan is seen holding its short-term interest rate target at -0.1 percent and the 10-year bond yield target around 0 percent at its policy meeting on September 21-22, in an attempt to stimulate the economy and boost inflation, which has been well below the central bank's 2 percent target over the past years. The country will be publishing updated data for inflation and the flash Jibun Bank PMI survey.
Also, the People's Bank of China will provide an update to its new loan prime rate (LPR) on Wednesday, but no changes are expected; while Australia's Markit PMIs will also be keenly watched. Other highlights include: New Zealand and Thailand foreign trade figures; Indonesia and the Philippines interest rate decisions; Malaysia inflation; and Taiwan jobless rate.