A huge night/morning for markets coming up, with the US Fed Reserve meeting in the early hours of tomorrow morning and the polls opening for the Dutch election later in the day.

The US Fed Reserve meets in the early hours of tomorrow morning to decide monetary policy measures for the country. There is quite a high expectation that the central bank will lift interest rates at its meeting. Markets have already factored in a rate rise as the economic figures continue to improve. However, wage inflation remains on the weak side. Wage inflation in important for a growing economy as it means that wages are keeping up with prices increase throughout the economy. As a rise in interest rates will make things more expensive, will the central bank pause in its tightening of monetary policy as a result of disappointing wage growth? Or, will the strong employment figures, inflation and growth be enough to force the Fed Reserve’s hand on the matter?

The other big event for the day is the Dutch election. Voting booths open later in the day. This could cause market volatility, particularly in the European markets. One of the favourites to win the election is Geert Wilders, who has an anti-EU stance. If he wins the election and forms government, there has been suggestions that Wilders might work towards removing the Netherlands from the European Union (or ‘Nexit’). We saw what volatility that the Brexit referendum and the Trump election victory caused. On the other hand, if Wilders does win, it does not necessarily mean that he will form government, as he likely need the support from other parties, such is the parliamentary structure in the Netherlands. Already, opposition parties have hinted that they would not work with Wilders.

On the announcement front, it is the US that once again dominates headlines. Just hours before the Fed Reserve meeting, the US is releasing some crucial data. This includes: CPI & Core CPI, Retail & Core Retail Sales, Empire State Manufacturing Index, Business Inventories, Crude Oil Inventories and NAHB Housing Market Index. The most important data is the CPI and Retail Sales data. CPI is vital to the economy as it represents cost increases for products and services. In a stable economy, inflation is generally pushed up by a demand for a product or a service. It can also be driven up by a lack of supply. Stable inflation growth is a good economic indicator as it shows consumers are willing to spend money within the economy, thus reflecting consumer confidence. The Retail Sales data is vital to determine the strength of the retail sector, a large part of the economy. As the retail sector contains many products that can be considered “luxuries” or non vital staples for households, a strong retail figure can reflect consumer confidence.

Elsewhere around the world, Japan is releasing its Revised Industrial Production data and Europe is publishing French Final CPI, Swiss PPI, Italian Retail Sales and European Employment Change. Finally, the UK is reporting its Unemployment Rate, Average Earnings Index and Claimant Count Change.