US Earnings Outlook Under Focus, USD Stabilizes, Fed Starts Meeting

Financial markets look set to be dominated by earnings ahead of tomorrow's FOMC meeting and press conference, as investors speculate on the tone, or otherwise, of what could give some clues as to how the Fed is looking to move post-QE2. This will be especially important given USD weakness on the back of last week's warning shot from S&P about the US deteriorating fiscal position and the US' political deadlock with respect to the debt ceiling.

KEY US EARNINGS TODAY INCLUDE Amazon (Q1 $0.61c), Coca Cola, (Q1 $0.87c), Ford (Q1 $0.50c), Hershey (Q1 $0.50c) and UPS (Q1 $0.85c) amongst others.

The most important factor so far has not been so much about the beating of expectations but more about the OVERALL OUTLOOK for Q2, which has been notable for some downward revisions on the back of higher costs, as was the case last night with Netflix.

US CONSUMER CONFIDENCE due out later this afternoon will be a key barometer of how the US consumer perceives the effect of these higher costs with expectations for April expected to rise to 64.5 slightly above the previous figure of 63.4.

UK data out later today is expected to show that while business optimism for April may have increased slightly to 10 from Marchs 7, industrial trends total orders for April will have dropped back to 2 from Marchs 5. Such weakness is especially important ahead of TOMORROWs UK Q1 GDP data comes in much stronger than estimations of 0.5%. MPC member Martin Weale --who last month voted for a rate rise--suggested last week he feared data could come in weaker than a lot of people expect. If that proven to be the case, then it could prompt him to reassess his vote at the May meeting.

Strong moves to new highs yesterday for gold and silver but slightly lower closes could be the first warnings that a correction could be on the cards, however in the absence of European markets could just be a low liquidity spikes. A close below $45 could well see a deeper sell-off while a close below $1,500 in gold could see a sharp move towards $1,480. Such falls could then translate across to an unwinding of commodity currencies recent gains, with the Australian dollar falling back to support around 1.0580.

By KM AshrafLaidi.com Staff