Oil Prices Hold Above $100 as Trump-Xi Meeting and Iran Conflict Keep Markets on Edge 
Asian Currencies Steady as Trump-Xi Summit, Inflation Concerns Boost Dollar 
Asian Stocks Steady as Iran War Concerns Persist Ahead of Trump-Xi Summit 
Australia Housing Tax Reform Sparks Debate Over Property Investor Tax Breaks 
Asian Currencies Hold Steady as Strong U.S. Inflation Data Boosts Dollar 
Bank of Japan's Ueda Flags Low Real Interest Rates as Key Factor in Rate Hike Timing 
DOJ Ends Probe Into Fed Chair Jerome Powell, Boosting Kevin Warsh Confirmation Prospects 
Bank of Japan Signals Potential Rate Hike as Inflation Risks Rise Amid Energy Shock 
Trump Faces Uphill Battle Seeking China’s Help on Iran Conflict 
Fed’s Goolsbee Warns Inflation Remains Elevated, Signals Caution on Rate Cuts 
The FOMC monetary policy statement will be published today at 18:00 GMT. Despite the pronounced shift in the direction of hawkish commentary from FOMC officials we see the November meeting as likely leaving rates unchanged ahead of the United States election, despite calls by policymakers to treat all meetings as live.
As hawks find renewed momentum with markets having weathered UK Brexit fallout, alongside continued support from employment conditions and what some are likely to interpret as evidence of firmer inflation, they ultimately will come up against the long-standing row of doves that are reluctant to take action until more improvement has materialized (particularly on an inflation-front).
“We expect it to maintain the target range at 0.25-0.50%, in line with consensus, due to the presidential election on 8 November,” said Danske Bank in its latest research report.
In many respects, last December’s move to raise rate was viewed simply as the Fed looking to get the show on the road, allowing them to possibly maintain a shallow rate trajectory as they move towards more normal policy.
Hence, clear emphasis will continue to be on the FOMC characterization of the labour market and what that might mean for monetary policy moving forward. Given the discussion regarding labour turnover and broader measures of unemployment, greater focus on the U6 measure (under-employment) is something likely to be seen in the months to come, particularly from doves, as the headline U3 measure continues along its downward sloping path.
Meanwhile, the Committee continues to closely monitor inflation indicators and global economic and financial developments (similar to what was seen in the July statement).
On balance, this statement should not be seen as particularly shocking, given the mixed performance in data seen thus far in the second quarter of 2016. However, it also appears to go a long way in setting up a likely 25 basis points hike before year-end.
