White House said it was further extending the TikTok enforcement delay, with the deadline to sell TikTok extended until December 16th.
European bourses are mixed; NQ saw fleeting pressure on reports that China ordered tech firms to stop buying NVIDIA’s AI chips; NVIDIA -0.9% pre-market.
USD is a touch firmer as markets brace for today’s FOMC announcement
NVIDIA pressure lifts fixed income to highs pre-FOMC, Gilts outperform after the region’s inflation report which was broadly in-line but as Services cooled a touch.
Crude trades with modest losses; Dollar strength weighs on gold.
Looking ahead, New Zealand GDP (Q2), US Atlanta Fed GDP, FOMC Announcement, BoC Announcement, BCB Announcement, Speakers including ECB’s Nagel, Fed Chair Powell, BoC’s Macklem & US President Trump. Earnings from General Mills.
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TARIFFS/TRADE
Chinese state media noted regarding US-China trade talks in Madrid that China will review and approve matters related to TikTok, technology export and intellectual property in accordance with the law, while it added that an agreement on TikTok is in the interests of both sides.
China and the US are in the “final stage” of negotiations for a state visit to Beijing by US President Donald Trump, with bulk purchases of American goods a critical part of the deliverables, according to sources cited by South China Morning Post.
USTR Greer and South African Trade Minister Tau are expected to meet on Thursday, via Bloomberg citing sources.
EUROPEAN TRADE
EQUITIES
European bourses (STOXX 600 +0.1%) are mixed and price action has been rangebound throughout the morning, as traders await the FOMC later today.
European sectors are mixed, and aside from top performer, the breadth of the market is fairly narrow. Tech tops the sectoral list today, following on from outperformance seen in Chinese tech-names such as Baidu; as a reminder, the Co. received an analyst upgrade related to its in-house chip venture and with SMIC (981 HK) testing domestically-made advanced chip-making machinery.
US equity futures trade on either side of the unchanged mark, as traders await the FOMC; expectations are for a 25bps cut. The NQ saw some fleeting pressure after China’s internet regulator told the country’s biggest tech companies to stop buying NVIDIA chips; currently -1.1% in pre-market trade.
China’s CAC has reportedly informed firms such as Alibaba (9988 HK / BABA) and ByteDance to terminate their testing and orders of NVIDIA’s (NVDA) RTX Pro 6000D, via FT citing sources; in order to focus on China’s domestic semiconductor industry The article highlights that several firms had indicated they would order tens of thousands of the China-specific product from NVIDIA, and had commenced testing work with suppliers prior to receiving the CAC order to terminate such activity.
Apple’s (AAPL) iPhone sales in China -6% Y/Y in July-August period, according to Counterpoint; Chinese smartphone sales -2% Y/Y over the same period.
UBS ups Europe’s STOXX 600 2025 target to 600 (current price 551.45).
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FX
After a session of losses yesterday, DXY is a touch firmer in the run-up to today’s FOMC policy announcement. In brief, the Fed is expected to cut rates by 25bps, with focus on guidance, vote split and updated SEP/dot plots. Thereafter, attention will shift to Fed Chair Powell’s press conference, whereby markets will be attentive to how forthcoming he is over additional near-term easing. Note, as an extra curve ball for the market, President Trump is due to be interviewed on Fox at 20:00BST. DXY sits towards the lower end of Tuesday’s 96.55-97.38 range.
EUR is a touch softer vs. the USD after hitting a multi-year high yesterday @ 1.1878. Incremental EUR drivers are lacking with final Y/Y HICP revised a touch lower to 2.0% from 2.1% and the latest ECB wage tracker (2025 wage growth seen at 3.158% vs. prev. forecast 3.152%) passing with little in the way of fanfare. On the former, the ECB observed that early signs suggest lower and more stable wage pressures in H1 2026. Note, ECB’s Nagel is due to speak at 18:00BST. If EUR/USD continues its ascent higher, ING suggests that 1.1910 “looks like the final resistance level before 1.20 is hit”.
The Yen is fractionally firmer vs. the USD, extending its winning streak to a third session. Overnight, Japanese trade data saw a smaller-than-expected deficit thanks to a smaller-than-forecast contraction in exports. Following the data, Pantheon Macroeconomics stated it expects the 15% universal duty on Japanese goods, imposed by the US to “weigh on Japanese exports for the rest of the year”. USD/JPY hit a fresh low for the month overnight @ 146.22 before picking up to levels north of 146.50.
GBP was largely unreactive to the latest UK inflation data, which saw August Y/Y headline CPI hold steady at 3.8%, as expected. Core declined to 3.6% from 3.8% (in-line with consensus) and services declined to 4.7% from 5.0% (exp. 4.8%). This could have implications for the UK’s fiscal picture, which remains perilous with the latest reporting suggesting the OBR told UK Chancellor Reeves that it will downgrade productivity forecasts for the UK economy. Cable is currently contained within yesterday’s 1.3598-1.3672. This could have implications for the UK’s fiscal picture, which remains perilous with the latest reporting suggesting the OBR told UK Chancellor Reeves that it will downgrade productivity forecasts for the UK economy. Cable is currently contained within Tuesday’s 1.3598-1.3672.
Antipodeans are both are softer vs. the USD and at the bottom of the G10 leaderboard with fresh macro drivers from Australia and New Zealand lacking.
CAD is a touch weaker vs. the USD ahead of the BoC rate decision, which is expected to see the Bank cut rates by 25bps, according to 25/32 surveyed by Reuters. Markets assign a 92% chance of such an outcome and an 8% chance of a larger 50bps reduction. A 25bps outturn would see rates slip below the current midpoint of the BoC’s neutral estimate.
PBoC set USD/CNY mid-point at 7.1013 vs exp. 7.1021 (Prev. 7.1027).
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FIXED INCOME
USTs in a holding pattern into the FOMC. Unchanged in a very thin band for the first part of the European morning. In terms of the Fed, a 25bps cut is the base case though markets continue to imply a slim chance of a larger 50bps move. Attention thereafter will be on forward guidance, to see if the FOMC implies further easing or retains a data-dependent stance; the vote split and dots of interest on this point. Note, during Chair Powell’s press conference President Trump will be speaking to the media as part of his UK state visit. More recently, a bout of strength was spurred by the FT reporting that China has ordered its large tech firms to stop ordering the China-specific NVIDIA chip. An update that has weighed on the broader risk tone and spurred USTs to a 113-21 peak with gains of 4 ticks at best.
Gilts gapped higher at the open following the UK CPI. opened with gains of 13 ticks before extending another 10 to an initial 91.62 peak (91.70 notched post-NVDA). Upside that was driven by the August inflation report. In brief, the majority of the release was as expected though, the services components came in cooler-than-expected and have spurred the morning’s modest dovish move. The release does not change the narrative of unchanged this week from the BoE or the view that inflation will likely tick higher in the months ahead. Countering the bullish impetus, and possibly factoring into the pullback towards and below opening levels seen as the morning progressed (before the NVDA update, at least), was renewed focus on the Autumn Budget. Overnight, multiple press reports suggest the OBR will be downgrading their assessment of UK productivity, a cut which will amplify the already difficult fiscal situation Chancellor Reeves finds herself in.
Bunds were initially in-fitting with USTs with specifics light. Thereafter, some modest upside was seen after UK CPI, but this proved fleeting. As the morning progressed, the benchmark began to pull back a little more and notched a 128.71 low. However, this was superseded by the risk move seen on the FT-NVDA report, propelling Bunds to a 128.98 peak with gains of 27 ticks at best. No move seen to the final EZ HICP, revised down to 2% (prelim. 2.1%) for the headline Y/Y while the core and super-core figures were unrevised. A dual-tranche German auction spurred little reaction in Bunds.
Germany sells EUR 0.786bln vs exp. EUR 1.0bln 1.25% 2048 and EUR 1.13bln vs. exp. EUR 1.5bln 2.90% 2056 Bund.
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COMMODITIES
Crude opened modestly on the backfoot and has trickled lower throughout the morning. Downside in the crude complex was exacerbated by reports that China’s CAC has reportedly informed firms such as Alibaba (9988 HK / BABA) and ByteDance to terminate their testing and orders of NVIDIA’s (NVDA) RTX Pro 6000D, via FT citing sources; in order to focus on China’s domestic semiconductor industry. WTI currently resides in a 62.91-63.55/bbl range while Brent sits in a USD 67.01-67.68/bbl range.
Precious metals decline with headwinds seen from a firmer dollar alongside selling pressure in metals, including a 1% drop in silver, shortly after Shanghai commodities trade got underway, and with demand subdued ahead of today’s Fed rate decision. Spot gold currently resides in a USD 3,662.63-3,695.52/oz range with Tuesday’s high (USD 3,703.24/oz) the latest all-time high.
Base metals are lower across the board amid the broader risk aversion and firmer USD sparked by reports that China’s CAC has reportedly informed firms such as Alibaba (9988 HK / BABA) and ByteDance to terminate their testing and orders of NVIDIA’s (NVDA) RTX Pro 6000D, via FT citing sources. 3M LME copper fell back under USD 10k/t and resides in a USD 9,931.05-10,136.70/t range at the time of writing.
Deutsche Bank lifts gold price forecasts next year to USD 4,000/oz average (prev. USD 3,700/oz); Silver lifted to USD 45/oz (prev. USD 40/oz)
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NOTABLE DATA RECAP
ECB Wage Tracker: 2025 Annual 3.158% (prev. 3.152%); early signs suggest lower and more stable wage pressures in H1 2026.
UK CPI YY (Aug) 3.8% vs. Exp. 3.8% (Prev. 3.8%); MM (Aug) 0.3% vs. Exp. 0.3% (Prev. 0.1%)
UK Core CPI YY (Aug) 3.6% vs. Exp. 3.6% (Prev. 3.8%); MM (Aug) 0.3% vs. Exp. 0.3% (Prev. 0.2%)
UK CPI Services YY (Aug) 4.7% vs. Exp. 4.8% (Prev. 5.0%); MM (Aug) 0.2% (Prev. 0.7%)
EU HICP Final MM (Aug) 0.1% vs. Exp. 0.2% (Prev. 0.0%); HICP Final YY (Aug) 2.0% vs. Exp. 2.1% (Prev. 2.1%)
UK ONS average house prices increased by 2.8% in the 12 months to July.
South African CPI YY (Aug) 3.3% vs. Exp. 3.6% (Prev. 3.5%); CPI MM (Aug) -0.1% vs. Exp. 0.2% (Prev. 0.9%)
NOTABLE EUROPEAN HEADLINES
ECB’s de Guindos says current rate is “appropriate”, via Welt; No reason for ECB to intervene with TPI (Transmission Protection Instrument).
French socialist leader says there is currently no indication of French PM Lecornu’s plan, according to Bloomberg
NOTABLE US HEADLINES
US Democrats are expected to unveil their CR counteroffer today, Punchbowl citing sources reports that this will include a permanent extension of the Obamacare enhanced premium tax credits
GEOPOLITICS
MIDDLE EAST
Japan will not recognise a Palestinian state at the UN General Assembly, according to Asahi.
“Israel Broadcasting Corporation Quotes Palestinian Sources Familiar with the Negotiations: We Are Ready to Discuss Stopping the War. But in a Different Way Than In the Past”, according to Sky News Arabia.
Iranian Foreign Ministry Spokesperson says Araqchi will hold a call with German, British and French counterparts this Wednesday.
RUSSIA-UKRAINE
IAEA team at Ukraine’s Zaporizhia nuclear power plant reported hearing shelling close to the site on Tuesday and saw black smoke rising from three locations nearby after multiple artillery shells struck an area outside of the nuclear power plant site perimeter, although there were no reports of casualties or equipment damage.
EU intends to propose additional sanctions on more Chinese firms linked to the Russian war effort, via Politico; diplomat adds that discussions on the 19th sanctions package are now expected on Friday and potentially includes the addition of Chinese firms.
Russian Deputy Foreign Minister Ryabkov says Russia is in contact with the US on various issues, and dialogue continues, via Ria; adds that Russia is ready to deepen energy cooperation discussions with the US, including on Sakhalin 1 project.
CRYPTO
Bitcoin moves higher and trades just shy of the USD 117k mark, whilst Ethereum is flat.
UK is set to announce closer co-operation on cryptocurrencies and UK Chancellor Reeves hopes greater regulatory alignment will allow better access to America’s deep capital markets, according to FT.
FCA says proposals to promote good business practices among crypto firms; “The rules aim to be proportionate, allowing UK firms to compete internationally”.
APAC TRADE
APAC stocks traded mixed with global risk sentiment cautious ahead of the crucial FOMC policy decision where the Fed is expected to deliver its first rate cut for this year.
ASX 200 was pressured with underperformance in the Consumer Discretionary, Real Estate, Miners and Materials sectors front-running the declines, while there was some resilience seen in Utilities, Energy and Tech.
Nikkei 225 swung between gains and losses and briefly returned to the 45,000 level with price action choppy following initial currency headwinds and mixed Japanese trade data in which Exports fell for a 4th consecutive month, albeit at a much slower-than-feared pace, while Imports printed a wider-than-anticipated contraction.
Hang Seng and Shanghai Comp gained with the Hong Kong benchmark led higher by tech strength as Baidu (9888 HK) rallied after an analyst upgrade due to optimism regarding its in-house chip venture and with SMIC (981 HK) testing domestically-made advanced chip-making machinery. Furthermore, Hong Kong Chief Executive Lee made several pledges in his policy address, while China also recently issued measures on increasing consumption.
NOTABLE ASIA-PAC HEADLINES
Hong Kong Chief Executive Lee reaffirmed economic growth of 2%-3% for this year in the annual policy address, while he said they will accelerate development of the northern metropolis area close to the mainland China border, will continue to increase public housing supply, and create land for large development projects. Lee also stated that Hong Kong is to set up a working group to boost AI development and is to set up a task force to help mainland Chinese companies go overseas. Furthermore, Lee said the Hong Kong Monetary Authority is to encourage banks to establish regional headquarters in Hong Kong, and the HKEX is to lure more Southeast Asia companies for secondary listing.
China trials its first advanced tools for AI chipmaking with SMIC (981 HK) testing domestically-made machinery as Beijing seeks to rival US-made processors, according to FT.
Wells Fargo (WFC) banker who had been barred from leaving China for several months, has been allowed to return to the US, according to the Washington Post.
China August crude iron ore output +8.8% Y/Y at 81.63mln metric tons, according to stats bureau Alumina +7.5% Y/Y. Refined Copper +14.8% Y/Y. Lead +3.7% Y/Y. Zinc +22.8% Y/Y.
Indonesian Central Bank unexpectedly cut rates by 25bps to 4.75% (exp. 5.00%, prev. 5.00%)
DATA RECAP
Japanese Trade Balance Total Yen (Aug) -242.5B vs. Exp. -513.6B (Prev. -117.5B, Rev. -118.4B)
Japanese Exports YY (Aug) -0.1% vs. Exp. -1.9% (Prev. -2.6%)
Japanese Imports YY (Aug) -5.2% vs. Exp. -4.2% (Prev. -7.5%, Rev. -7.4%)
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