Pre-FOMC positioning dominates market

•     Pre-FOMC positioning dominates market

–    Wall Street Journal reports that FOMC likely to keep the “considerable time” phrase but   qualify it, perhaps to the effect that rate hikes could come sooner if labor market continues to improve faster than expected

–    Market focuses on “considerable time,” ignores qualification; rates, USD fall

•     What to look for in FOMC:

–    Does statement still include the “considerable time” phrase? Is it qualified?

–    Have they raised the growth or inflation forecasts, or Fed funds forecasts?

–    Does Yellen emphasize the possibility of earlier-than-expected rise in rates, or the recent weakness in the payroll figures?

•     USD/JPY volatility rises more on FOMC days than EUR or GBP

•     China reportedly supplies additional liquidity to banks to boos growth; equities, commodities move higher

•     Today:

–    Eurozone: final CPI for August

–    UK:  Bank of England MPC minutes. Will there still be two dissenters? Also unemployment, average earnings for Aug. Not that important ahead of Scotland vote.

–    US: CPI for August, NAHB market index for September