Sean Callow

Mexico is the U.S.'s largest trading partner and a flare-up in trade tensions was definitely not on the market radar.

The price action since the FOMC statement indicates a real division of opinion in markets over the U.S. dollar outlook.

It's very interesting, and eye-catching, that the MAS has gone back to post-global financial crisis settings, and sends a strong message about the weak external environment, as one of the world's most trade-sensitive economies, Singapore's concern over a 'less favourable external environment' should be noted by the likes.

Financial markets might be more comfortable with Hillary (Clinton) than Bernie (Sanders), there would have to be at least some jitters over the guy who plans to break up the big banks. But it's probably too early to expect the U.S. presidential race to have an impact on the U.S. stock market.

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While economic conditions have been uneven and overall growth a little disappointing, the labour market has remained strong, the housing and service sectors have also performed well, supported by lower rates and a lower AUD.

We lean towards no change but can see why markets are on edge, this meeting includes the semi-annual outlook report, updating forecasts which will surely include an admission that it will take longer than previously thought for inflation to reach the 2 percent target.

This raises further questions about the policy outlook for the Federal Reserve and Bank of Japan, both of which have meetings next week.

While this would simply be a stable outcome - fully consistent with how the PBOC has explained the 'new system - it would generate a wave of headlines about a stronger yuan and should support risk appetite.