The FOMC Minutes released yesterday indicate that the majority of the Fed officials believe that the economy was still weak, and vulnerable to further adverse shock.

  • This downbeat view by the Fed comes despite early signs that a recovery could begin by the end of the year.  However, the Fed did announce that they may slow the pace of its stimulus spending, as more evidence may support a US economy recovery in the second half of this year.
  • The Bank of Japan revised its forecast and now expects Japan's economy to contract 3.4% rather than the 3.1% in the twelve months to March 31, 2010.  On the other hand, the central bank said that Japan's economic conditions have stopped worsening, citing better industrial production and exports data.
  • China's economic growth accelerates to 7.9% on government stimulus spending and record bank lending, pushing Asian equities to a two-week high.  China overtook Japan as the world's second-largest stock market by value for the first time in 18 months.  The value of China's domestic stock market rose to $3.21 trillion, compared with Japan's $3.20 trillion.  The US is the world's biggest equities market worth $10.8 trillion.
  • With just a few companies such as Goldman and Intel reporting strong results pushing equities higher, investors may be getting ahead of themselves as there are still many issues the governments and central banks need to deal with.  Just to mention some of the big issues, that would be unemployment, credit issues and the housing market.

Currency to watch out for: EURUSD & GBPUSD

  • The EURUSD pivot point is at 1.4025 with a preference to enter into long positions at 1.4035
  • The GBPUSD pivot point is at 1.6340 with a preference to enter into long positions at 1.6350

Today's calendar and market movers:

  • US Unemployment Claims expected to drop to 550,000
  • US TIC Long-Term Purchases expected to rise to 16.7 billion
  • US Philly Fed Manufacturing Index expected to fall to negative 4.9

Stocks:

  • US stocks jumped on Wednesday, with the Dow up 3.1%, the S&P up 3% and the NASDAQ up 3.5%
  • As of 06:15 GMT the Nikkei is at 0.6% and the Hang Seng at 1.6%