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Markets Accept Yellen Policy Change

John M. Bland, MBA, CTA

Central Banks Driving Markets

The major event in the week just past was the minutes from the March FOMC meeting. It was at that meeting that the central bank had announced that it was undertaking a new policy stance. The new policy posture was no longer to be data dependant, but focused on inflation expectations. There has been a growing concern in the central banking community that prolonged deflation exacerbated by negative interest rates is running the risk of entrenching very low inflation and sluggish growth.

As a result, it appears that major central banks are now acting in concert to do what they can to break the deflationary cycle and promote economic growth. They have thrown inflation concerns aside figuring they have the tools and knowledge to contain inflation if needed, but promoting growth in what economists call a "liquidity trap" is a lot harder. The Fed Minutes confirmed this market perception and it even appeared that many of the policy hawks reluctantly have bought into this policy change.

Current Market Conditions

The focus in the coming weeks will be on the next round of quarterly earnings which start this week. How the corporate sector is performing will be used as a key indicator of how the economy is likely to perform for the rest of the year, and in turn What future Fed policy is likely to be. All the markets are highly sensitive now to the prospects for future Fed policy. In forex, the key EURUSD pair is probably in a rough 1.10 to 1.15 trading range.

WEEKLY HIGH IMPACT NEWS:

11-APR MONDAY

01:30 CN- CPI

12-APR TUESDAY

08:30 GB- CPI

13-APR WEDNESDAY

12:30 US- Retail Sales

14:00 CA- Bank Of Canada Decision

14:30 US- EIA Crude

18:00 US- Beige Book

14-APR THURSDAY

00:30 AU- Employment

11:00 GB- Bank of England Decision

12:30 US- CPI

15-APR FRIDAY

14:00 US- University of Michigan Survey (prelim)

Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.

John M. Bland

co-founder

www.global-view.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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