In quiet markets ahead of G3 central bank meetings, the FX market's focus has once again fallen on China. But economists at ING would wait for the policy meetings to set the true FX tone.

Short-term trends may well fizzle out

In quiet markets ahead of G3 central bank meetings later this week, currency pairs are being driven by the soft set of Eurozone July PMIs and also the prospect of some renewed Chinese stimulus after China's Politburo promised 'counter-cyclical' measures. These look like short-term trends.

The reason why we warn against pursuing a full 'risk-on' rally in Rest of World (RoW) currencies is that the European economy looks weak and Wednesday's FOMC meeting will probably see the Fed's foot remaining firmly on the monetary brakes.