Will weak data from China, an outside chance of policy easing in Japan and mixed economic signals in the euro zone be enough to divert the US Federal Reserve from its march towards a rate hike? David Pollard reports.
If all the world's a stage, then the headline act goes to the Fed this week. Though China has a not insignificant bit part - as does Japan. Amid worries its vast QE programme is not doing the trick, its monetary policymakers meet ahead of the Fed. No move's expected now, but after a totally unexpected easing last October, nothing's ruled out. As for China: more weak data. This time investment and factory output lagging forecasts. Which means more bad news for European exporters - if not that bad yet. (SOUNDBITE) (English) NICK PARSONS, GLOBAL HEAD FX STRATEGY, NAB, SAYING: ''China is still going to grow something around 4 per cent year over year at a very, very minimum. So we're not going to see the pace of export growth that we have done thus far in the euro zone recovery, but that doesn't mean it's condemned to be petering out.'' NAB's head of FX strategy, Nick Parsons, is among those who think the US central bank will stay its hand this week. The recent signs of weakness in the global economy putting a much-heralded return to a tightening cycle still just out of reach. Though a hike now could be a positive. (SOUNDBITE) (English) NICK PARSONS, GLOBAL HEAD FX STRATEGY, NAB, SAYING: ''There is an argument for getting it out of the way so that markets know what they're dealing with it and they can cope with it ... For most people the uncertainties of the last couple of months, if repeated every two months, would be found to be somewhat wearying.'' For the euro zone, a slight downward revision to Italy's consumer prices for August appears to confirm a growing risk of deflation. Though euro zone industrial production in July rose by a much bigger than expected 1.9 per cent on the year. The ECB too faces its own policy dilemmas.