Saxo Spotlight: What’s on investors and traders radars this week; Fed to hike, volatility ahead

Saxo Spotlight: What’s on investors and traders radars this week; Fed to hike, volatility ahead

APAC Strategy Team

Summary:  The Fed is set to hike rates on Wednesday with a 0.75% hike baked in, followed by the Bank of England with a 0.5% rise expected the day after, while the Bank of Japan will also meet on Thursday. So, strap in, volatility is ahead, especially as there are a plethora of market holidays to commemorate the Queen. This means market moves this week will be amplified. China’s loan rate will be on watch, as well as key economic updates from the Eurozone, Singapore, Malaysia, and Australia. Meanwhile, inflationary pressures pick up, with wheat prices strongly rebounding on US drought concerns, frost in Latin America, and La Nina headed for Australia. Here’s what traders and investors are watching.

FOMC meeting key to chalk out the path of Fed rate hikes into 2023

While the markets have fully baked in another 75bps rate hike for the meeting this week, which will take the Fed funds rate to 3-3.25%, some traders are also calling for a full percentage hike of 100bps especially after the hotter-than-expected August CPI. A higher-than-expected inflation print, still-strong labor markets and a general resilience in the US economy continue to provide room to the Fed to stay aggressive, but it will stay difficult for the Fed to signal any more rate hikes than what the market is pricing in with a terminal Fed funds rate now seen at ~4.5%. The dot plot and Chair Powell’s press conference will be key, and volatility is likely to be elevated.

The dollar momentum has extended further last week, and a jump above 3.5% on the US 10-year yield could further boost the USD. The effect of verbal interventions in the yen have faded, but a move in USDJPY towards 145 could spark further concern from the Japanese authorities. EURUSD has also been stuck around parity since the hawkish ECB but risks will be magnified going into the FOMC meeting this week.

Japan’s CPI and central bank decision to signal concerns on yen weakness

Japan has key data on August inflation due Tuesday followed by the Bank of Japan decision a day after the FOMC on Thursday. Consensus estimates for August CPI are touching close to 3% levels, with core higher as well at 1.5% YoY from 1.2% previously. Upside pressures continue to persist from high food and energy prices, while the soft year-ago base also means mobile phone charges are likely to pick up. While it is still hard to expect a pivot from the Bank of Japan this week, given that Governor Kuroda remains focused on achieving wage inflation, the meeting will still likely have key market implications. There will likely be increased voicing of concerns by the authorities on yen weakness, and there is also some chatter around the Bank of Japan bolstering its lending programs to support the private sector as high inflation curbs spending.

Bank of England may tilt to hawkish despite recession concerns

The BoE meets on Thursday after last week’s meeting was delayed by a week for Queen Elizabeth II’s funeral. Policymakers are expected to hike rates by another 50bps, which would bring the Bank Rate to 2.25%, although a 75bps hike is still on the table. Beyond September, analysts forecast a 50bps increase in November and 25bps in December, taking the Bank Rate to 3%, where it is expected to stay until October 2023. Also worth highlighting is the “fiscal event” delivered by new Chancellor of the Exchequer Kwasi Kwarteng on Friday. This will be his first statement on how he plans to deliver new Prime Minister Liz Truss' pledge to make the U.K. a low tax economy, which risks stoking inflation in the medium-term. However, short-term plans on energy support package suggests lower inflation to end this year, but that wouldn’t be enough for the BoE to go easy on its inflation fight.

China’s Loan Prime Rates are on watch

According to a survey conducted by Shanghai Securities News, a number of leading banks in China have recently cut their 3-year deposit rates by 15bps and deposits of other tenors by 10bps. These decreases were in response to the Loan Prime Rates (LPRs) cuts on August 22.  With no change to the September Medium-term Lending Facility Rate in September, the LPRs are unlikely to be adjusted this Tuesday.

Volatility to pick up. S&P500 could fall 3-14%

With the Fed set to hike rates on Wednesday, followed by the Bank of England the next day, you can expect market moves in either direction to be magnified as there will be less liquidity in the market given there is a suite of public holidays across the globe for the Queens funeral. So we will be watching the Vix Future: VXU2, VIX Option: VIX:xcbf , And Vix ETF: VIXY:bats. On top of that, Also keep in mind, if the Fed’s hike is more than the 0.75% baked in, the S&P500 may re-test the next support level of 3,764, meaning it could fall 3%. If it breaks below that S&P500 could retest the November 2020 lows of 3,500 which implies the market could fall ~14%. I think we also need to keep in mind, the last time the MACD and RSI were at these levels was ahead of the COVID-19 crash when the S&P500 fell over 30%.

Australian economic pulse checks this week

This week is full week of Australian economic news to watch; with the RBA kicking off the releases on Tuesday, handing down the RBA Meeting Minutes from its September interest rate meeting Tuesday. Lending data is released Wednesday from Westpac (which is likely to show lending is further slowing). On Friday the all-important Australian services sector update is released from S&P Global. So, where is our focus? The RBA minutes, which will likely pave out the central bank’s expectations for inflation, which are expected to be increased given the coal price, where Australia gets the majority of its energy from has hit another record high (and coal is not in peak demand season yet). On top of that the RBA will probably allude to La Nina’s threat on Australia. Flooding and heavy rain is headed for Australia for the third year in a row, which is also expected to push up food prices later this year, with some fields likely to be flooded, which will add to global supply shortages.

Eurozone PMIs on the card to gauge how hawkish ECB can get

Eurozone PMIs are likely to dip further into contractionary territory as energy price hikes weigh on spending and business plans. Manufacturing PMIs are likely to ease to 48.7 in September from 49.6 previously, and services are expected to fall to 49.1 from 49.8, according to Bloomberg consensus estimates. A weaker-than-expected number could temper the hawkish ECB bets for the October meeting.

Singapore and Malaysia inflation to see further upside pressures

Singapore’s headline inflation likely jumped further above the 7% mark in August from a reading of 7% YoY in July, underpinned by higher food and energy prices globally, higher rents due to under-supply, and demand side pressures from regional reopening and a pickup in tourism. Malaysia’s continued ban on chicken exports is also adding to the food inflation, and further tightening from the Monetary Authority of Singapore at the October meeting remains likely. Meanwhile, Malaysia’s inflation also likely rose further in August from 4.4% YoY in July due to higher commodity prices and weaker ringgit, as well as the strength in consumer demand. Bank Negara Malaysia’s next meeting is only scheduled in November, before which we will have another CPI print out. However, it can be assumed that monetary tightening will likely continue.

Wheat prices muster up on US drought concerns and La Nina in Australia

It’s not just US dryness and drought concerns affecting crop markets again, but La Nina concerns mount in Australia and are causing wheat prices to pick up, with global wheat supply again likely to shrink. In Central and Southern Plains dryness and drought is affecting winter wheat planning, while periods of showers in the Northern Plains and Canadian Prairies could limit the remaining spring harvest. Meanwhile showers in Brazil are limiting winter wheat harvests, and frost and freezes in Argentina are likely to dampen more developed wheat. However, good news- the most favourable conditions are being seen in Australia for wheat. However, if La Nina is worse than feared it could sever global wheat supply. The wheat price is trading higher today by 1.7%, rising a total of 16% from August. The technical indicators are also suggesting more upside is ahead for wheat. Not good for consumers, or inflation. But opportune for potential traders and investors. 

Lennar’s results may provide some insights into the U.S. housing market

With 30-year fixed rate mortgage interest rates jumping above 6% for the first time in 14 years, since Sept 2008 and home affordability falling to historically lows, investors are concerned about the state of the US housing markets. Results from a leading home builder Lennar (LEN:xnys) this Wednesday after market close will give a good opportunity for investors to gauge the latest market conditions in the US housing market. Analysts, as per the survey by Bloomberg, are estimating revenue growth of 30% Y/Y and 8.3% Y/Y EPS growth in the quarter ending Aug 31, 2022.  Investors, however, will focus on the management team's comments and forward guidance. 


Key economic releases & central bank meetings this week

Monday, Sep 19

  • Japan Market Holiday / UK Market Holiday
  • Hong Kong SAR Unemployment Rate (Aug)
  • Eurozone Construction Output (Jul)
  • United States NAHB Housing Market Index (Sep)

Tuesday, Sep 20

  • Japan Inflation (Aug)
  • Australia RBA Meeting Minutes
  • Switzerland Balance of Trade (Aug)
  • Poland Employment Growth (Aug)
  • Spain Balance of Trade (Jul)
  • Canada Inflation Rate (Aug)
  • United Sates Building Permits (Aug)

Wednesday, Sep 21

  • Australia Westpac Leading Index (Aug)
  • Netherlands Consumer Confidence (Sep)
  • United Kingdom Public Sector Net Borrowing (Aug)
  • Eurozone ECB Non-Monetary Policy Meeting
  • United States Fed FOMC Interest Rate Decision, MBA Mortgage Applications (16/Sep), Existing Home Sales (Aug)
  • Brazil Interest Rate Decision
  • New Zealand Balance of Trade (Aug)

Thursday, Sep 22

  • Australia Market Holiday
  • Japan BoJ Interest Rate Decision, Foreign Bond Investment (Sep)
  • United Kingdom BoE Interest Rate Decision
  • Hong Kong SAR Interest Rate Decision, Inflation (Aug)
  • France Business Confidence (Sep)
  • Eurozone ECB General Council Meeting
  • Switzerland SNB Interest Rate Decision
  • Taiwan Interest Rate Decision
  • Philippines Interest Rate Decision
  • Norway Norges Bank Interest Rate Inflation Decision
  • Indonesia Interest Rate Decision
  • Thailand Balance of Trade
  • Canada New Housing Prices Index (Aug)
  • United States Continuing Jobless Claims (10/Sep)
  • Eurozone Consumer Confidence Flash (Sep)

Friday, Sep 23

  • Japan Market Holiday
  • S&P Global Worldwide Flash PMIs
  • United Kingdom Gfk Consumer Confidence (Sep)
  • Netherlands GDP (Q2)
  • Singapore Inflation (Aug), Industrial production (Aug)
  • Malaysia: CPI (Aug)
  • Spain GDP (Q2)
  • Switzerland Current Account (Q2)
  • Poland Unemployment Rate (Aug)
  • Canada Retail Sales (Jul)

Key company earnings releases this week

  • Monday: AutoZone, Top Glove
  • Tuesday: Haleon, Core Lithium, New Hope Coal,
  • Wednesday: Lennar,, General Mills, Sunac China, Brickworks
  • Thursday: Costco Wholesale, Accenture, FactSet Research Systems, Darden Restaurants
  • Friday: Carnival, Challice Mining


Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (
- Analysis Disclaimer (
- Notification on Non-Independent Investment Research (

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000

Contact Saxo

Select region


The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.