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Focus back on China slowdown in the wake of the FOMC meeting

The expectation of last week’s meeting of the Federal Open Market Committee (FOMC) was enormous, however once more it seems as though the dovish influence on the committee have been underestimated. In focusing on “international developments” the market will take this to be a focus on the China growth story which continues to slowdown. In the past few weeks the economic data from China has been deteriorating and this destabilising factor on global markets has prevented the Fed from firing the gun on a tightening of its monetary policy. This now means that the pressure will be ratcheted up on how traders will react to data out of China and the US. Is China still slowing down and what is the spill over into the US economy? These issues will be debated now and this week there is some key data out of both economies that will help to add detail to that picture. The one key data release to watch for this week is China related, however, that does not mean to say that US data will also not be poured over as we continue to get releases of this month’s key housing data.

Forex markets have taken a cue from the FOMC decision and the dust is continuing to settle. The outlook on key majors have improved, but how sustainable is this view and will the bulls be able to make a breakout. I take a look at the technical outlook on Euro/Dollar and also how the recent market volatility is impacting on a key commodity currency, the Aussie dollar.

In equity markets there has been a considerable impact on trading sentiment in the wake of the Federal Reserve’s decision. The moves on equities may have comes as a bit of a surprise in response to a dovish FOMC meeting, however the impact on key European markets such as the DAX and the FTSE 100 have been significant. What could be the market that is hit the most? I do the technical analysis of these key markets and what the crucial levels to watch will be.

Commodity markets have been a real trigger for market sentiment in the past few weeks, and seems set to continue with such crucial economic data announcements, whilst focus remains on US Treasury yields as traders  come to terms with the Fed’s reasons for not hiking interest rates.

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At Hantec Markets Ltd we provide an execution only service. Any opinions expressed by analyst Richard Perry should not be construed as investment advice or an investment recommendation. This report does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. Forex and CFDs are leveraged products which can result in losses greater than your initial deposit. Therefore you should only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such transactions.