A quiet start to the post holiday week as traders digest the ramifications of last week's events. The strong US payroll report on Friday saw the US Dollar exhibit strength -vs- all the majors. Given the optimistic tone, including the upward revisions to previous months, a number of market pundits are expecting the FED to begin tapering QE purchases by September with the process completely ending by the second quarter of 2014. The June FOMC meeting minutes, scheduled for release on Wednesday, could provide further clues about the timing of this event.
Both the BOE and ECB were more dovish than expected after their respective meetings last Thursday. The BOE, with their new governor Carney, made it clear that economic conditions were not as strong as they would prefer and that rates were probably higher than they should be, while the ECB's Draghi came out and flatly stated that key interest rates would remain "at present or lower levels for an extended period of time.” This divergence in monetary policies would appear to set the stage for the US Dollar to embark on a protracted rally over the coming weeks.
The market will be paying close attention to a couple of data releases from China, namely Monday's CPI and Wednesday's Trade Balance. Thursday's BOJ meeting should be a non event. Also on tap Thursday is the Australian employment report which is expected to show that the labor market still remains soft, thus potentially opening the door for the RBA to cut rates again. US Weekly Jobless claims data will be released on Thursday and US Michigan consumer sentiment data is slated for Friday.