Forex trading was pretty quiet in Asia today. Major currency pairs barely budged, and regional stock markets also held steady. That calm comes even after another batch of weak Chinese economic data, which showed the slowdown there is spreading. Traders didn’t seem too rattled, though—the numbers mostly reinforced the idea that Beijing will need to roll out more stimulus soon. For now, the prospect of extra support from the government is helping keep risk sentiment from turning sour.
China’s policy outlook is still tied closely to the Fed. Once the Fed makes its rate-cut path clear, the PBoC will have more room to ease without sparking capital outflows. That’s keeping bets alive that China could cut rates again in the months ahead, especially with growth still softening.
But the real action this week comes from central banks. Four big ones are meeting: the Fed, the BoC, the BoE, and the BoJ. The Fed’s decision is the main event—a rate cut is widely expected, but there’s a lot of debate over how big it’ll be and how split the committee might be. Markets will also be parsing fresh economic projections. Meanwhile, a packed data calendar includes UK jobs, inflation, and retail sales; Germany’s ZEW survey; Australia’s jobs report; and New Zealand GDP.
Geopolitics is back in the mix too. High-level U.S.–China trade talks kicked off in Madrid on Sunday, bringing together senior U.S. and Chinese officials. The talks follow July’s meeting in Stockholm, which extended the 90-day tariff truce and reopened U.S. access to China’s rare-earth exports. Hopes for a breakthrough are low, though—another temporary extension looks like the most realistic outcome. Markets are also watching closely to see if Washington pushes back the Sept. 17 deadline for ByteDance to sell TikTok’s U.S. operations, or risk facing a ban.
On the FX side, the dollar sold off again today, with the pound and euro leading the charge higher. The greenback was the weakest major currency on the day, while the Kiwi also lagged. Traders are bracing for the Fed decision, and chatter picked up after SocGen joined Standard Chartered in calling for a bigger 50bps cut—though futures markets only give that about a 4% chance. More broadly, markets are fully pricing in a steady run of 25bps cuts through year-end. Economists largely agree: the Fed has ground to cover, and an easing cycle is well underway.
Elsewhere in Europe, Fitch downgraded France’s rating to AA- last Friday, citing its growing debt. The euro shrugged it off and kept rallying.
Back on the trade front, the U.S.–China talks stretched into a second day. Treasury Secretary Scott Bessent said “good progress” had been made on technical issues and that TikTok was close to being resolved, though he stressed national security won’t be compromised. Chinese officials were less forthcoming.
Still, tensions aren’t easing much. Beijing opened an anti-monopoly probe into U.S. chipmaker Nvidia and hit back at Trump’s push for the EU to impose secondary tariffs on China over Russian oil. China’s Commerce Ministry called the move “unilateral bullying” and warned it would respond as needed.