China to reassure world during President Xi’s visit to US

The Fed's primary reason - global growth worries - for not lifting US interest rates on 17 Sep was not welcome by markets. US equities followed through with more selling on Friday. Two Fed presidents, John Williams (San Francisco) and James Bullard (San Louis), said over the weekend that they are still expecting rates to rise this year. Debate is now shifting on whether the Fed will hike at the next FOMC meeting on 29 Oct, or the last on 16 Dec. 

EUR/USD appreciated to a high of 1.1450 on 18 Feb but closed the session lower at 1.1298. European Central Bank (ECB) officials have been coming out to stress the divergence between the monetary policies of US and Eurozone whenever EUR/USD appears to want to appreciate above 1.15. As for USD/JPY, it has returned to fluctuating around the psychological 120 level, in line with the Bank of Japan's more neutral stance these days. 

This week, most attention will be on China President Xi Jinping's first official state visit to America. The visit starts tomorrow (22 Sep) in Seattle and ends on Friday (25 Sep) with US President Barack Obama hosting Xi at the White House. Xi will next travel to New York for his debut speech before the United Nations General Assembly next Monday (28 Sep). Apart from US-China relations, focus will be on how China reassures the world that its economy is still sound after the latest volatility in its stock market and exchange rate. To signal stability returning to its markets, the central parity for USD/CNY has been steady between 6.3584 and 6.3772 since 7 Sep, and the Shanghai Composite Index between 2983 and 3257 since late August. The verdict remains open if China can win back confidence in its economy and markets.