The Final Countdown: All Eyes On Scottish Referendum With FOMC In Focus

The day of reckoning is finally upon us on Thursday. That is, the Scottish referendum, when the Gaelic nation of just more than 5 million chooses whether to break free from the UK or to stay put. If the former happens, no one is quite sure what will ensue — aside from, inevitably, market chaos. Traders and analysts alike will be eyeing developments out of Scotland closely — and they'd be wise to. If the country votes to go independent, it means more than just a declining pound.

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" ... a 'yes' vote is negative for the Scottish economy," Neil MacKinnon, an analyst at VTB Capital, wrote in a note to traders Sunday evening. "Investors might take the view that once the immediate knee-jerk reaction in the market that a 'yes' vote is actually positive for sterling (contrary to conventional wisdom) as capital flows into England and the net drain of a Scottish economy is jettisoned."

"A 'yes' vote would increase separatist risks elsewhere in Europe thus pushing peripheral government bond yields higher alongside a broader re-pricing of political risk in the euro zone. A small 'no' vote would be met with obvious relief in the markets," he added.

Aside from the Scottish referendum, here are the top five events to keep an eye on for trading in the week ahead.

1. The Federal Reserve (Fed) will meet on Wednesday, with analysts expecting no benchmark interest rate cut but continued tapering of this time $15 billion. But what traders will really look for is any change in tone from the Fed's policy statement.

The statement is "likely to become less dovish again, including a change to 'considerable time,'" High Frequency Economics wrote in its weekly report on Sunday.

MacKinnon, meanwhile, added that there will likely be a "slightly hawkish tinge" in it with "an acknowledgement of a stronger US economy."

"The GDP forecasts may be raised slightly with the unemployment rate projections slightly lowered," he added. "'Tapering' concludes next month. We continued to think the first rate hike in the Fed funds rate will be in 1Q15."

"While the timing of the first hike remains highly uncertain, the FOMC is getting closer to consensus on the exit strategy," Rabobank Financial Markets Research said in a note to traders on September 10. "If consensus is reached next week, we could see Chair Yellen provide us with more details at the post-meeting press conference."

2. The Bank of England (BoE) will release the minutes from the Monetary Policy Committee (MPC)'s meeting in September, with analysts expecting no change to policymakers' sentiment on whether to raise the bank's benchmark interest rate — showing votes to tighten monetary policy are still the minority.

3. The German ZEW indicator is due out Tuesday, and market players expect the figures for September to continue painting the euro-area doomsday landscape we've been seeing even more of recently. The ZEW is forecast to tick down to 5.0 from 8.6 — showing that the German economy can only hold out for so long before its euro-area peers drag even its economy down.

4. UK consumer inflation data is due out on Tuesday too, with August figures expected to come in relatively flat, aside from a month-on-month quickening of 0.4% versus a contraction of 0.3% in the prior month.

5. The final Consumer Price Index (CPI) figures for the euro area in August are due out on Wednesday, with analysts forecasting the annual figure to worsen slightly, to 0.3% from 0.4%. Month-on-month, meanwhile, the forecast is set to quicken 0.1% from a 0.7% contraction in the previous period.

To get the live figures as they're released, check out our economic calendar — the fastest of its kind in the world.

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