Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
US data was mixed overnight, (strong retail sales, very weak empire survey, and as expected IP) but the main take away was the solid outcome for retail sales. The control group measure for sales printed 0.4%m/m in Aug. (est. 0.3%), with a strong revision to the July figure (up to 0.6% from 0.3%). Overall, that fits with our economists' already strong expectation for 3% consumption growth in Q3. Empire was extremely weak for another month (- 14.67 vs. est. -0.50), but our economists point out that it has historically had a weak connection with ISM, and moreover, this year the relationship with ISM has deteriorated even more.
Overnight saw a heavy selloff in bonds and a rally in USD that started on US data releases that were overall solid (see USD). However, commodity currencies managed to outperform overall, with NZD, CAD, and AUD the top performers- retracing yesterday's losses. The USD move makes sense alongside the move in bonds (US 10s up 10bps), but there is also some sense of a general 'risk-on' driver, with commodity FX seemingly benefitting along with a strong rally in equities and selloff in vol. A strong improvement in dairy prices also helped (see NZD). On the other end of the spectrum are European currencies, with little to point to behind the moves beyond 'flows' in a progressively illiquid market ahead of Thursday's FOMC decision.
