Markets’ attention turned to the US and its shifting economic landscape

Foenix Partners

Foenix Partners

Europe’s issues and upcoming Greek negotiations fell out of the headlines last week as attention turned to the US and its shifting economic landscape amid fresh debate about its monetary policy outlook. Despite a busy economic calendar, the week proved light on top tier releases and focus quickly turned to Wednesday’s FOMC monetary policy statement. Chair Janet Yellen acknowledged improvements in the US economy, notably the labour sector, but positioned the Fed in data-watching mode with confirmation that the committee would remain “patient” in looking to raise interest rates. Despite the date of the first rate hike subsequently moving back, now c. June of this year, the dollar remained in favour and only lost some ground on Friday with confirmation that its economy grew more slowly than expected – advanced figures put 2014 GDP at 2.6% (vs. 3.0%). Europe briefly returned to the limelight on Friday with CPI falling further into deflationary territory at -0.6%, although a drop in the bloc’s unemployment rate to 11.4% protected the currency from major losses.

Manufacturing PMI from Europe, the UK and the US will kick-start currency markets today before a quiet Tuesday and then equivalent services PMI on Wednesday along with ADP employment from the US. Very little in the way of new information is expected from Thursday’s ECB’s Monthly Report or the Bank of England MPC announcement before Friday’s ‘highlight’ session sees UK trade balance data, US Non Farm Payrolls and unemployment rate along with Fed speakers.

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