The main story in the markets at the moment is still the falling of the Japanese Yen as the market is focussed on its continuing weakness. That old adage that “the trend is your friend” seems to be ringing true as speculators continue to bet against it causing seven-year lows against the US Dollar and six-year lows against the Euro.

The other obsession in the markets appears to be rate hikes and who will strike first and when? This is a recurring theme. For a while the UK was in the driving seat and then the US took over. Whilst the US is still in pole position, the Federal Reserve are hardly falling over themselves to get interest rates raised as quickly as possible.

The minutes for last month’s Federal Reserve meeting seemed to underline the stance that “rate hikes will happen when they happen”. There is an anxiety about disinflation with the feeling that the decline in oil and other commodity prices and also lower import prices means that inflation is likely to edge lower in the near term. Economic growth in the medium term may be relatively slow as a result of a deterioration in external political, economic or financial situations. However the situations in China, Japan and Europe do not seem to be affecting the US economy just yet. The US jobs situation is also improving gradually. In conclusion, expect a rate hike but don’t expect it soon and don’t expect it to happen before the Fed is ready.

Early PMI from Germany and France have been worse than expected. We await PMI from the Eurozone, retail sales from the UK, CPI, PMI, jobless claims and home sales from the US and consumer confidence from the Eurozone later in the day.