FUNDAMENTAL REVIEW FOR THE WEEK (16 - 20 September 2024)

The current week has long stood apart in the international economic calendar. It is during the current five-day period, on Wednesday, September 18, that the key meeting of the Federal Reserve System this year will take place. And it is at this meeting that the beginning of the rate cut cycle will be announced, which traditionally seriously changes the balance of power and the value of assets in the global financial arena.

The main question now is whether the regulator will lower the rate by 0.50% or limit itself to 0.25% for a start. At present, market sentiment regarding the rate cut by 0.50% is divided 50-50. However, if we take into account the fact that the Federal Reserve System traditionally seeks to support stock market growth ahead of the elections, since many Americans keep their savings in stocks, then the chances for a more aggressive option of 0.50% may be in favor. It is also important to wait for the US retail sales data on Tuesday, which could adjust the odds of interest rates in one direction or another.

The week opens with weak economic data from China and news of a new attempt on Donald Trump's life. August data on retail sales and industrial production in China turned out to be below expectations, while the unemployment rate rose. However, since China is currently "on vacation", celebrating the "Mid-Autumn" holiday, the data did not have a strong impact on the markets at the moment. And the main attention of investors, as was said earlier, is now completely focused on the upcoming meeting of the Federal Reserve.

The news of the attempt on Trump's life at a golf club made headlines, although he was not hurt. The incident raises questions about how it can affect his political position and, as a result, the stability of the dollar in the midst of the election race.

Also this week, the Central Bank of Foggy Albion meets. The Bank of England is expected to cut rates by 0.25% on Thursday, but Wednesday's inflation report could influence future guidance. A weaker dollar after the Fed meeting could push the BoE to cut more aggressively.

With the Fed and BoE meetings coming up, as well as key inflation data, this week promises to shape market sentiment and the trajectory of rate cuts in the coming months.