FOMC poised for dovish cut as labor market weakens – BBH

Markets expect the FOMC to deliver a dovish cut because the US labor market is worsening. That can drag US Dollar (USD) lower and support risk assets, BBH FX analysts report.

Miran, Cook to attend Fed meeting amid political drama

"Stephen Miran was confirmed as Fed Governor by the Senate just in time for the 16-17 FOMC meeting. Miran is the most likely FOMC member to vote for a 50bps cut tomorrow. Meanwhile, Fed Governor Lisa Cook is also expected to attend the upcoming FOMC meeting. An appeals court allowed Cook to continue working during the ongoing legal proceedings. President Donald Trump could still ask the Supreme Court to step in."

"US August retail sales (1:30:pm London, 8:30am New York) and industrial production (2:15pm London, 9:15am New York) take the spotlight today. Consensus sees retail sales at 0.2% m/m vs. 0.5% in July. The retail sales control group used for GDP calculations, is projected at 0.4% m/m vs. 0.5% in July. Retail sales activity has held up well the past three month, growing roughly at trend pace. However, the sharp slowdown in labor demand points to looming pressure on household incomes and future consumption."

"Industrial production is seen at -0.1% vs. -0.1 in July, though signs of stabilization are emerging. Rising ISM manufacturing New Orders-to-Inventories ratio suggest firms may need to ramp-up production as demand is outpacing supply."