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Fed in focus?

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  • Financial markets appear surprised that the US Fed is so dismissive of the oil price move as a disinflationary force - which says more about the poor state of economic education today than it does about the Fed's communication strategy.
  • We get more Fed communication today, with three speakers and the Beige Book. Look for labour market signals from the Beige Book - with a bifurcated labour market tightness may be reported for skilled labour. Unit labour costs and the non-manufacturing ISM are due.
  • Euro area service sector sentiment is expected to moderate a little. Italy, which could flirt with the 50.0 level, may get a little more attention in the media, but a slight shift in a dubious statistic should not be taken as prophetic. Euro retail sales should hold up relatively well.
  • The UK has the autumn statement of fiscal policy (it is not, of course, autumn but that is a technicality that need not bother us). This is the last real opportunity for fiscal largesse ahead of the election. Australian GDP was weaker than expected - not China related, mainly weaker public sector capex.

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