FOMC fails to guide markets

In the past one thing could always be relied upon from FOMC minutes; market guidance. Whilst Messrs Greenspan and Bernanke wouldn’t have gone in for “advance guidance” which is the modern way for Central Bankers, the minutes of FOMC meetings they presided over could always be relied upon to give direction to markets.

The most recent edition of the FOMC minutes were an exercise in avoidance. To say that future interest rate decisions will be based upon employment and inflation data is tantamount to saying it will only get light tomorrow if the sun comes up.

David Beckham, the former England footballer was an expert in making a comment but saying nothing. For example when asked if Zidane was a great player he would say “ He was one of the best I played with”. Well of course he was David of course he was!

Will there be an interest rate hike on March 15th? Yes!

The U.K. economy fared a little better than expected in Q4’16 but for the whole year, growth at 1.7% pushed the U.K. below Germany at the top of global growth tables. Thus in a single stroke, the Government's favourite statistic was gone. (Forever? We will see)

The French Presidential election continues to provide impetus to Euro traders. Another day another opinion poll. After Marine Le Pen received her best estimate yet of share of vote in the run off, she has now slipped a little as her rival Emmanuel Macron receives support from a veteran centrist. The fact that Macron is a former investment banker should cause a flutter of alarm to French voters

Another former investment banker, Steven Mnuchin, President Trumps Treasury Secretary, in a speech yesterday claimed that a strong dollar was a good thing in the long run. The only surprise is that he didn’t emphasize such macho comments with a Tarzan call and a lot of chest thumping!

The dollar is, and will remain for some time, the reserve currency. China is nowhere near (or prepared for) challenging the dollar’s role and the Euro won't even last long enough to become anything more than a failed experiment.

The Australian economy is faltering a little on domestic activity despite a record trade surplus driven by high commodity prices. Capital spending fell by more than expected in January leading to concern that should China slowdown, domestic activity won't be able to pick up the slack

The economic calendar is light for the rest of this week so attention will turn to the exercise in futility that is predicting the U.S. Employment figure. Non-Farm Payrolls have become increasingly unpredictable with revisions of 20% or more leading to calls for the data to be delayed to later in the month or called the “preliminary” payrolls.

Trade used to be the main monthly driver but that honour has been with employment for a number of years. Maybe given Trump’s fascination with trade and the value of the dollar the Trade deficit will return to the top.