Markets having to reassess the potential of a Fed rate hike this week

For months market participants have been deep in debate over the timing of the Federal Reserve’s rate hike. June was the first realistic timing of a move but that came and went as the doves on the committee were unmoved. Then all the talk was of a September move, but once again that opportunity was passed up with another dovish Fed statement that effectively lay the blame at the door of a China economic slowdown. All along though the Fed has been talking about any such move being “data dependent”. On Friday markets got a look at the employment situation report in the US and the inference is that it is not conducive to an immediate rate hike. Questions are now being raised of whether a rate hike will happen in 2015 at all now. Is the Fed now running out of time to raise at all as the opportunities that it has to hike rates in front of the big presidential election in 2016 begins to lurk on the horizon?

Markets reacted on Friday with some volatility but this week there is a suggestion that the bad news is good for sentiment. The question is whether this is a sustainable move and what has the economic calendar got in store as the key drivers of financial markets this week. I take a look across the forex markets and the implications across major currencies driven by this Non-farm Payrolls report. I take a look at the outlook for the coming week with a technical perspective on the euro and also sterling, both against the US dollar.  Equity markets have given a significant response to the data, but can they maintain their moves? There is much to ponder as earnings season in the US approaches. I look at the technical outlook on the European equity markets with the DAX and FTSE 100 in focus. Commodities are also reacting to events with a rally across the precious metals, but will it last? Crude oil is also a key driver of sentiment and I take a technical look at the outlook.