The Fed minutes caused a stir in markets as the odds of a June hike were ramped up after a hawkish FED stated that they see a June hike more likely than not, provided that economic data warranted the hike and global risk such as the BREXIT and Chinas stance on depreciating the yuan remain in check. US equities responded as expected to the possibility of a tightening in monetary policy and erased early gains to finish relatively flat with the DJIA losing 0.03%, the S&P500 gaining 0.02% and the NASDAQ gaining 0.36%. In FX the USD gained across the board as markets further priced in the possibility of a rate hike. While commodities lost ground with gold losing over 20 USD since the announcement and crude coming off its best levels to trade $1.50 off its highs, helped along by high Crude Oil Inventories (-1310k vs -3500).

In Asia, equities traded mostly lower, following Wall Streets subdued action with the Nikkei225 closing flat as a weakening JPY and better than expected Machine Orders kept the index afloat. The ASX 200 lost 0.9% as the commodity linked economy was dragged down by lower commodity and energy prices. In China, the Shanghai Composite shrugged the news, gaining 0.4%, as the PBOC continued injecting liquidity into the market.

The FED has set the challenge, economic data must impress in order for the hike to prevail and today will give us the first taste of how things will unfold as we await several key data releases from the US, with positive data expected to keep the USD bid but negative data expected to be judged more harshly and having a bigger impact on the USD, equities and commodities. Elsewhere, the EUR is set for volatility as the single currency unit awaits the release of the ECB Monetary Policy Meeting Accounts. While, we expect volatility in the GBP as markets digest the latest Retail Sales data.

Today’s Key data is as follows:

USA

  • Philly Fed Manufacturing Index expected at 3.2
  • Unemployment Claims expected at 276k
  • FOMC Member Fischer Speaks
  • FOMC Member Dudley speaks

UK

  • Retail Sales m/m expected at 0.6%
  • MPC Member Vlieghe Speaks

CAD

  • Whole Sales m/m expected at 0.5%

EU

  • ECB Monetary Policy Meeting Accounts