The market continues to look at the economic data out of the United States as a potential driver of monetary policy by the Federal Reserve and this is impacting the US dollar. There may be question marks over whether this is in fact true, but officially according to the FOMC statement, the “actual path of the federal funds rate will depend upon the economic outlook as informed by the incoming data”. In short, the Fed is data dependent. So considering the latest batch of important data that we got last week the chances of a Fed rate hike in June appear to be receding. The Fed has only just dropped its focus on global economic and financial risks, but the mixed nature of the “incoming data” last week will mean it is difficult to budge the doves. The Non-farm Payrolls data on Friday is a factor in this, but is by no means the only factor. So moving into this week, what have we got to look for to drive the markets. It would appear a bit of China data to start with and then to end with US Retail Sales, with a little bit of the Bank of England to throw into the mix. We consider the implications.
In forex markets the bearish medium term pressure on the US dollar has shown signs of abating, but is this a rally that can be trusted? We also consider the factors driving individual currencies amongst the majors. There is also a technical analysis of Euro/Dollar and Dollar/Yen. The equity markets have been corrective in recent weeks and they are now in danger of retreating back to pivotal levels. This could mean that this will be a crucial week if the bears remain in control. There is also a technical analysis of the German DAX and the FTSE 100. We finish with a look at what is driving commodities and the outlook on bonds, with a technical analysis of Gold and Brent Crude.