By TraderVox.com
Tradervox (Dublin) – With the crisis in euro-zone taking a backseat for the moment, investors are looking for new catalysts that will spur the market. Strong labor market report from the US seemed to give the dollar the much needed momentum but the start of the week has not been so cozy for the greenback.
The lackluster performance of the dollar could not take it through the critical breakout level to maintain the bullish momentum. However, investors are keeping a close eye on the US retail sales report expected today and the FOMC report expected later today. The dollar has been left on the cusp of making a meaningful break or reverse to its normal trend.
Investors are wary of the situation in Europe and the signs of a coming recession are keeping the market on the low. If euro zone goes into a recession, it is will weaken the global GDP severely. Signs are already showing with China lowering its growth target in part because of the economic conditions in the region. Investors are expected to find some direction in the FOMC decision which is widely expected to retain the current monetary policy.
However, investors will closely analyze the decision as they try to get any clues of when the next Quantitative easing might occur. The Fed is expected stave off making any suggestions for the next big bond purchases as it adopts a wait-and-see move toward the situation. In contrast, if the fed give an indication of another bond purchases or a continuation of its “Operation Twist,” investors will take this a show of dwindling confidence in the recovering economy.
The US economic news is expected to counter the negative news from Europe providing safe haven for investors. The dollar is expected to continue with its bullish run as positive US retail report and FOMC decision are released today. If the Fed suggests a possible QE the dollar might go down while suggestions that the QE plans have been kept on hold will drive the dollar up.
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