Summary of the key overnight headlines:

• Last night’s release of the minutes from the last FOMC meeting showed that the Fed was concerned with the way the US economy is going. The standout quote was “The economic outlook had softened somewhat and a number of members saw the risks to the outlook as having shifted to the downside”. The Fed also noted that they expected higher unemployment and slower growth for some time.
• Hardly grounds for the continuation of the rally! While US markets certainly gave up earlier gains they still managed to close slightly higher (the Dow Jones) or only slightly lower (the S+P 500 Spreads).
• It does make you wonder if there really is nothing fundamental about this rally.
• Overnight, Chinese GDP and inflation (CPI) both came in below estimates.
• This is bad news for the Australian and New Zealand dollar which are heavily dependent on China for exports. The AUD/JPY is down 0.8% and the NZD/USD is off by 0.44%.
• The Bank of Japan added to the kept rates on hold and predicted stagnant growth for 2011.
• The Yen is in command this morning as fear creeps through markets. The USD/JPY is down 0.38%.
• Still to come we have US PPI and unemployment claims at 13.30 GMT.

The Financial Fixed Odds update by David Evans, Market Analyst, BetOnMarkets.

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