The Federal Reserve is cautious about monetary policy now. Accommodative monetary policy has been like rocket fuel for market sentiment in the past, but the reasons behind the caution could drive a different response by the market now. The Fed’s continuous referencing of the global economic conditions in the FOMC meeting minutes last week act as a warning sign, whilst the IMF also reflects similar concern over the state of the global economy. How can we expect markets to react and what could be the impact? We could begin to learn a lot more this week about the current outlook for the global economy as there is a whole raft of economic data points out of China to drive risk appetite as they will paint a picture of how the economic re-balancing of the world’s second largest economy is progressing. What do we need to look out for from China and also what are the other key economic releases to watch?
In the forex markets there have been some significant developments, with the US dollar continuing to trading around something of a key crossroads with the euro and some huge gains seen on the yen. Will the Bank of Japan look to intervene? What is set to drive the forex trading in the coming week? We also take a technical analysis appraisal of the key Euro/Dollar and Dollar/Yen markets. In the equity markets the change in risk sentiment has also had an impact and the question is whether the improvement in oil can drag markets higher once more. There is also a technical analysis of the German DAX Xetra and the FTSE 100. We also look at the key bond and commodities markets with the outlook for gold and oil, both of which are also by a technical analysis of gold and Brent Crude oil.