The Federal Reserve is widely expected to leave interest rates unchanged at its meeting on Wednesday. Treasury yields have fallen sharply following weak jobs data and comments from Janet Yellen suggesting a June rate hike is unlikely. The Fed's dot plot projections and Yellen's press conference will be closely watched for signals about the path of rates. Elsewhere, the Bank of Japan, Swiss National Bank, and Bank of England also announce monetary policy decisions this week. Brexit fears and inflation data will also influence currency and equity markets.

1. Weekly Outlook
Monday 13th June with Richard Perry, Market Analyst
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ensure you fully understand the risks involved, seeking independent advice if necessary prior to entering into such
transactions. You should first carefully consider your investment objectives, level of experience, and risk appetite and only
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WHEN: Wed, 15th June 1900BST
LAST: Fed funds 0.25% to 0.50%
FORECAST: Fed Funds 0.25% to 0.50%
Impact: Treasury yields have been smashed in the
wake of the Non-farm Payrolls report and Janet Yellen
comments that have all but confirmed that a June rate
hike is not going to happen. Watch for the dot-plots
which currently suggest two hikes still in 2016. If this
remains the case then the potential for a July hike is
much greater (September is difficult in front of the
Presidential election), the dollar and Treasury yields will
rally whilst equities could also sharply decline. The
press conference will also be a key indicator for the
rates outlook.
Key Economic Events
Date Time Country Indicator Consensus Last
Tue 14th Jun 09:30 UK CPI (core) +0.4% (+1.3%) +0.3% (+1.2%)
Tue 14th Jun 13:30 US Retail Sales (MoM) +0.3% +1.3%
Wed 15th Jun 09:30 UK Unemployment / Average Weekly Earnings (x b) 5.1% / +2.1% 5.1% / +2.1%
Wed 15th Jun 15:30 US EIA crude oil inventories -3.2m
Wed 15th Jun 19:00 US FOMC monetary policy 0.25%/0.50% 0.25%/0.50%
Thu 16th Jun 01:00 Japan BoJ monetary policy -0.1% -0.1%
Thu 16th Jun 08:00 Switzerland SNB monetary policy -0.75% -0.75%
Thu 16th Jun 12:00 UK BoE monetary policy +0.50% +0.50%
Thu 16th Jun 13:30 US CPI (core) +1.1% (+2.2%) +1.1% (+2.1%)
Fri 17th Jun 13:30 US Building Permits / Housing Starts 1.15m / 1.15m 1.12m / 1.17m
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1N.B. Please note all times are BST (GMT+1), data source Reuters
Macro Commentary
Should the Federal Reserve raise rates this week? Yes, as monetary policy needs to be normalised and the longer
the Fed’s maintains emergency monetary policy, the longer the economic malaise will last (artificially propping up
markets, misallocation of capital etc.). Will the Fed raise rates this week? No, as markets would be completely
blind-sided causing a significant shock of selling pressure. Ultimately, the Fed warns the market when it is going to
move and following disappointing Non-farm Payrolls and Yellen’s recent speech, according to CME Group
FedWatch the probability of a hike at Wednesday’s meeting has fallen to just 2%. The Fed has almost become
beholden to the market when it comes to its rate hikes. However, the interest factor could be with the dot-plots
again. What if the dot plots continue to say two hikes in 2016? Could there be a significant swing back in favour of
the dollar again? Could Yellen use her press conference to signal that July is the meeting to move? If not in July,
then it may only be one this year, in December. The proximity of the September FOMC meeting to the Presidential
Election (on 8th November) would be deemed too political. The market is currently saying 58% probability for
December (July is 25%). With recent data concerns this sounds about right, but in the coming months there will be
bouts of dollar strength and dollar weakness according to good/bad data, leading to little overall dollar direction.
Must Watch for: FOMC monetary policy
US 2 year Treasury yield
Will FOMC dot plots keep 2 hikes and spike yields back higher?

2. Weekly Outlook
Monday 13th June with Richard Perry, Market Analyst
Foreign Exchange
The dollar has been rallying despite the continues downside pressure on Treasury yields. Is this sustainable?
The market is taking this move as risk-off and the dollar tends to perform better when risk appetite is lower.
However, market concern is highlighted by the outperformance of the yen, which remains the market’s safe
haven currency of choice. I do not see the dollar as being able to sustain its strength with the June FOMC
looming. A change to the dot plots to two hikes in 2016 would put the dollar under pressure again. However it
could also be a chaotic week for forex majors with three other central banks set to announce monetary policy in
less than 24 hours. After the Fed kicks off on Wednesday evening, the Bank of Japan announces early on
Thursday, followed by the Swiss National Bank early in the European session and finally the Bank of England at
1200BST on Thursday. All are expected to stand pat, but that will not stop the volatility, especially with the
threat of Brexit added into the mix. The Bank of Japan is struggling with the strengthening of the yen and
inflation that is weakening again so there is an argument for further easing on Thursday, but it remains unlikely
with the BoJ set to update on its inflation expectations at the July meeting. Also, the BoJ would want maximum
impact from the move and a Brexit threat may reduce its efficacy on the yen.
WATCH FOR: Monetary policy decisions dominate the week with the Fed, BoJ, SNB and BoE all
announcing. Add in Brexit volatility and inflation for both the UK and US and it could be interesting.
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FX Outlook
GBP/USD
Watch for: Under increasing pressure following
the break of $1.4330
Outlook: The technical breakdown below
$1.4330 key support has re-opened the
March/April lows around $1.4000/$1.4090. The
momentum is increasingly negatively configured
momentum indicators reflect the downside
pressure and unless the bulls can regain
$1.4330 the outlook will remain negative. With
the Brexit vote less than two weeks away there
is a fear of downside risk not having been
factored in yet. The breakdown of support
reflects the increased fear and if the momentum
accelerates the crucial February support at
$1.3833 could be tested.
EUR/USD
Watch for: Volatility with the Fed but the range
play to continue
Outlook: There is still a lack of real direction on
the dollar despite the near term recovery being
seen. Pulling back from $1.1415 has set up for a
stronger dollar in the near term but there is
significant uncertainty over how the FOMC
meeting will pan out and the direction the dollar
will take afterwards. The long term pivot band
$1.1050/$1.1100 remains key with $1.1215 also
supportive. Long term resistance remains around
$1.1465. Momentum indicators suggest a
choppy range play will continue.

3. Weekly Outlook
Monday 13th June with Richard Perry, Market Analyst
Equity Markets
Bond yields across the world are under pressure as the threat of stagnant growth and deflation remain key
factors for investors. With the Fed likely to put off another rate hike, markets are beginning to look with great
concern at a bigger picture of struggling corporate revenue growth, earnings expansion that has been driven by
cost cutting. Is this an environment to be owning equities with markets still at elevated valuations? Add in the
fears over a Brexit and risk appetite is very much under pressure. The DAX is a market that is eared towards
international growth and the constant underperformance as the markets come under pressure is a concern. The
accelerating sell-off is now approaching a test of the key May support around 9737, a break of which would
change the outlook from a sequence of higher lows and higher highs, to a lower high (at the June high of
10,365 which is below the April high at 10,474) and lower low. That is classic Dow Theory and suggests that
further weakness would be seen in due course. However for now the support at 9737 remains intact. The FTSE
100 is seemingly managing to outperform the DAX, with the market being helped through its exposure to oil.
However, the key multi-month support at 6036 is once more back in range and a closing breach would
complete a huge top pattern. Wall Street has though been the standout performer of the major indices and has
only just pulled back from multi-month highs. It has a long way to go back towards its equivalent support at
2022, but watch for the near term pivot at 2085 this week as a breach would signal further correction.
WATCH FOR: Continued weakness on Treasury yields would be negative, whilst the FOMC will also set
the tone for Wall Street. Brexit volatility will also be an issue for FTSE 100.
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3
German DAX
Watch for: Continue to see this as a range play,
but the May lows is under threat
Outlook: Will the selling pressure drive the DAX
lower to confirm a breach of 9737 this week?
This is the key May low and a close below the
support would be a significant medium to longer
term outlook shift. Already an uptrend since
February has been broken. There are a few
technical indicators to watch that might give an
early warning signal. In the past three months,
the 89 day moving average has been a good
gauge and but support at 9835 has been broken,
and the RSI which has previously managed to
bottom around 40 has also broken down. A
closing breach of 9737 opens 9500 and a
negative outlook.
S&P 500
Watch for: The pivot support at 2085 is key for
the near term outlook this week
Outlook: A correction finally seems to be setting
in after three weeks of consisting but creeping
gains. The concern is that corrections after a
period of painfully slow upside can often be far
quicker as markets can take the escalator up but
the lift back down again. That means that a pivot
band of support at 2085 which has been in place
for the past 6 weeks is key this week.
Momentum indicators remain positively
configured and could actually do with a healthy
correction, but preferably with a nice orderly
move. A move below 2085 could quickly result in
the 2022 lows coming back into play.
Index Outlook

4. Weekly Outlook
Monday 13th June with Richard Perry, Market Analyst
Other Assets: Commodities & Bonds
The gold price had been showing signs of a near term correction on Friday morning, however that was before
declining risk appetite spiralled lower and the flight to safety kicked in. This comes ahead of the Federal
Reserve meeting this week which if the Fed takes an even greater dovish shift, could pull the gold price higher
towards the key resistance at $1303. Gold would thrive is a low risk, dovish Fed environment. However, do not
forget silver too which is also in sharp recovery mode. The underperformance that was driven through the dollar
strength of May is being unwound quickly and we now find the precious metals outperforming all of the forex
majors since June began. The oil price correction may have now set in, but this looks to be technically driven
rather than a sustainable correction. It should provide another chance to buy on support this week.
The decline on global bond yields to record levels reflects the huge concerns that traders have over the
prospects for global demand and growth. Remarkably, the German 10 year Bund yield is now within sniffing
distance of going negative. As the BoJ continues to plough into the JGBs market, the Japanese 10 year yields
are also falling to record lows in negative territory. Furthermore, even the US which is apparently on a
tightening cycle of monetary policy has the 10 Year Treasury yield at multi-month lows. The bond markets show
concerns and are decidedly risk off.
WATCH FOR: Fed monetary policy will be key, but also watch for the BoJ too driving sentiment.
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4
Gold
Watch for: Resistance could come under
pressure if the momentum is maintained
Outlook: A near 6% rally in the past six
completed sessions has quickly turned around
the outlook. The price action on gold this week
could be the difference between a breakout and
another trading range continuation. The FOMC
decision could be key (it depends upon how
dovish the FOMC is), but I expect this range to
continue. Daily chart momentum remains strong
but there is now the considerable band of
overhead supply from the key turning points of
March, April and May to overcome. I am still
expecting another peak to come under the
$1288 high, but if this is breached then there
could be a move on $1303 this week. Support is
between $1234/$1248.
Markets Outlook
Brent Crude oil
Watch for: A short correction finding support
$48.65/$50.50 remains another chance to buy
Outlook: Near term corrections remain a chance
to buy on oil and after a couple of days of
consecutive correction we find Brent Crude
coming back to this sort of opportunity. The
strong momentum indicators are just now looking
to unwind which should help to renew upside
potential for the next leg higher. There is the
initial band of support between $48.65/$50.50
which would be an ideal buy-zone this week,
whilst more considerable support comes in at
$47.40. The support of the 5 month uptrend
comes in between $45.90/$46.90 this week but I
would not expect the correction to go that far.

5. Weekly Outlook
Monday 13th June with Richard Perry, Market Analyst
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5
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