A public holiday in Japan has seen a quiet start to the week in global FX markets. In terms of overnight news, there were note some soft China activity data that calls out for some more stimulus. One can also note the rally in Korean asset markets after the government scrapped a planned lowering in the threshold for the capital gains tax. This has dragged USD/KRW away from 1400 again, ING's FX analyst Chris Turner notes.

DXY to continue trading in a tight 97.20-98.00 range

"Looking ahead, it's a big week for central bank meetings. Five of the G10 central banks are meeting, and three of them are expected to cut. The highlight, of course, is Wednesday's FOMC meeting. We and a strong consensus are looking for a 25bp cut, then two further 25bp cuts in October and December. The market currently prices 68bp of the 75bp in expected cuts this year. We see the dollar staying gently offered into the meeting, and it could sell off a little further should a 50bp cut at the meeting prove a closer call than most expect."

"Beyond the FOMC meetings, highlights of this week's US calendar are Tuesday's release of August retail sales data and Thursday's release of weekly jobless claims and July Treasury International Capital (TIC) data. Last week's jump in jobless claims briefly hit the dollar, and the TIC data will be scrutinised for any signs that foreign investors are not just hedging US assets, but outright selling them."

"We still think there are some seasonal effects keeping the dollar gently supported, but this week's FOMC should set the tone into the fourth quarter. Expect DXY to continue trading in a tight 97.20-98.00 range until Wednesday evening."