FOMC shows that the Fed is still on the way to tougher action, but not so soon.

• FOMC shows that the Fed is still on the way to tougher action, but not so soon. FOMC meeting in April did not contain any major surprises for the market. They showed that the Committee considered a weakness in the growth of Q1, as largely due to the exceptional weather and a strike at the port, and expect that it will follow the strong growth in the future. Nevertheless, the Committee wants to see that the data are confirmed in the coming months, as rising interest rates in June and had the effect of whether they grow in September, it depends on whether the data justify such a move on the issue. (In theory, they could grow in July, too, but is not planning any press conference after the meeting, so the market suggests that it is less likely). On the prospects of inflation is nothing particularly new is mentioned.

• Given the market doubt about the strength of growth, it was interpreted as the probability of a rate hike this year and the federal funds rate will remain unchanged until November. The dollar strengthened against most currencies G10, exclusion CHF, GBP, CAD and SEK, which rose slightly against the dollar. This may be due to the confirmation of the fact that the Committee intends to continue to strengthen measures. Apparently, although the opinion that the degree of tightening measures over the longer term will be less and the expectations of the Fed buying futures retreated 3.5 bp This increased the value of the currencies of developing countries, and some of the most troubled countries, such as the BRL and ZAR. The reason is probably slowing growth rates in the US, causing the collapse of smaller developing economies.

• The market is still waiting other than the Federal Reserve. Fed Funds for October were last changed to the level of 0.235%, at this level there is a chance of about 45%, which will raise rates in September. In December 2017 will be at 1.71%, this implies that the target range of the Fed or 1.50% or 1.75% -1.70% -2.00%. That compares with the median estimate of FOMC 3.63% and a weighted average of 3.18% during the same time. Fed Chairman Yellen emphasized the high level of uncertainty regarding the prospects of increasing the neutral real interest rate in the next few years, so perhaps the expectations of the Committee on the rapid growth of a little exaggerated. However, their expectations are likely to remain significantly higher than the market price formation, which seems to support a lower assessment of the sustainability of the neutral rate, and even the fact that the Fed has to return to a zero interest rate for some time. Who is true that the Fed has a surprisingly bad reputation of economic forecasting. Nevertheless, I believe that the market is overly pessimistic. While the economy continues to expand, I believe that they are determined to gradually bring interest rates to a more normal level. This involves the adjustment of market expectations and the strengthening of the dollar over time.

• PMI China increased, but below expectations; Japan is making progress. China and Japan today launched a round of PMIs for May, with mixed results. In China, the PMI HSBC manufacturing index rose to 49.1 from 48.9. Improvement was but slightly below expectations of 49.3 and still shows that slows down production. In addition, comments on the economy were quite shocking: after discussing "the further deterioration of conditions", "soft customer demand" and "further reduction of jobs," she returned to that outlined the good news:

On a positive note, deflationary pressures remain relatively strong, input and output prices continue to decline, leaving scope for the authorities to implement further stimulus measures if necessary.

• "positive note" that the "deflationary pressures remain relatively strong!" However, stocks in Shanghai showed an increase of 1.3%, apparently on expectations that the government will come to the aid of "a horse." I see this as an extremely inflated expectations, and to what - that time, Chinese investors are likely to be disappointed. The continuing deflationary pressure is likely to further reduce commodity prices, and I continue to see bearish momentum on the AUD.

• Japan Manufacturing PMI Markit / JMMA rose from 49.9 to 50.9, moving into expansionary territory and exceeding expectations of 50.3. It was good news for Japan after yesterday's "so-so" according to the news of GDP for the 1st quarter, which showed economic expansion, based largely on unsustainable growth stocks.

• Today's speakers: Thursday - day of PMI. After China and Japan, out preliminary data on manufacturing and service sector PMI data for May from several European countries and the euro area as a whole. Expectations of PMI in manufacturing - a slight decrease, in contrast to recent positive signs that the Eurozone economy is gaining momentum. It may be somewhat negative for the euro. Also in the afternoon, the consumer confidence index published by the European Union.

• The ECB publishes the minutes of the meeting of 15 April. Due to the fact that the Council left rates unchanged and changes over time is not expected, this event does not attract as much attention as the meeting of the Federal Reserve and the Bank of England.

• In the UK, published retail sales data for April. Strong data could add the weight of the sterling.

• It is expected that the index PMI Markit US demonstrate the expansion of production at an accelerated pace. Initial jobless claims for the week ending May 16 is expected to rise slightly, but it is also expected that the overall trend of improvement of the labor market will remain unchanged. The index of business activity FRB Philadelphia in May predicted a slight increase, while the Conference Board's leading index for April is expected to accelerate slightly in comparison with the previous month. Sales of existing homes in April, is expected to show growth, according to the good data on new housing and building permits showed Tuesday. There is an opinion, if all the indicators will be released, mostly in line with expectations, they must confirm that the weakness in the first quarter comes to an end, and that the second quarter is gaining momentum. It should support the dollar.

• With regard to the speakers today, we will hear a member of the Board of the Bank of England - Martin Huila and vice-chairman of the Fed - Stanley Fischer. Member of the Board of the Bank of England Martin Weale is one of two members who voted for a rate hike. It will be interesting to see if it is likely to once again resume tightening policy discussions in the near future. This can be beneficial for GBP. Apart from him, Fischer will speak at the conference of the ECB in Portugal.