An incredibly weak Non-farm Payrolls report has signalled a huge change of outlook for the markets, and the dollar is likely to remain under pressure this week. Having been moving towards pricing in a Fed rate hike in the next couple of meetings, there has been a sharp about-turn and suddenly there is a real possibility of not only a rate hike being deferred until later in the year, but does this mean question marks over the viability of 2016 at all now? Financial markets have become so sensitive to the actions of the Federal Reserve than any data point that points towards a material shift of sentiment drives a huge crowd change in the market. Once the dust settles, are we now going to see a sustained period of dollar weakness now? The market will be looking towards the outlook of Janet Yellen as a signal this week but the market has already taken a view. Aside from Janet Yellen’s speech on Monday what else is there this week that can drive the market sentiment?
This shift in market expectations on a Fed rate hike has had a profound impact on the dollar and this means that the forex majors have burst through some key levels. How has the outlook shifted from these moves? We undertake a technical analysis of the key Euro/Dollar and Dollar/Yen markets. We also look at the key moves in the equity markets and how the shifting sentiment could impact in the coming days. There is also a technical analysis of the DAX Xetra and the S&P 500. Finally we take a look at the impact on commodities and bond markets. The Non-farm Payrolls report has driven a significant turnaround in the outlook for gold, whilst there could be question marks over how the oil price can drive higher with the OPEC decision again disappointing over production limits. How have Treasury yields reacted to the shift in Fed hike expectations. We finish with a technical analysis of Gold and Brent Crude oil.
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