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Will the Federal Reserve keep their foot on the gas? This is the question that most equity traders around the globe will be asking themselves ahead of the Federal Open Market Committee (FOMC) statement on Wednesday.
Regardless of your opinion as to the strategy that the US and other governments have used in an effort to stimulate the economic environment, few would argue that it has been quantitative easing that has pushed equity markets higher over the last few years. Judging when the recovery is strong enough to stand on its own two feet will be a difficult task, and inevitably there will be a few wobbles.
When the taps are inevitably turned off it will be interesting to see how long equities can retain their status with investment managers as the most attractive asset class for their funds.
Looking at Monday specifically, traders have been nudged into a positive state of mind following an optimistic finish to trading in the Asian markets. Although Japanese fiscal policy continues to throw up as many questions as answers, their equity market looks bullish again.
The only real economic data out in the morning trading session is the latest EU trade balance figures, which have come in well below expectations. Arguably, some of the blame for this can be attributed to the currency markets rather than export figures.