Over the next 24 hours we get the minutes from the last Federal Reserve meeting and the first ECB meeting of the year. At tomorrow's ECB meeting, I am sure, once again Mario Draghi will face questions about euro zone inflation, as yesterday's data showed a fall to 0.8% in December from 0.9% in November. The FED minutes, released later today, should give some further insights into the factors that persuaded the FED to decide to start tapering the purchase program in December. It may also give some insights into what they may do going forward. Thursday's ECB meeting, despite the weaker inflation data, in my view will not lead to a change in monetary policy, despite the ECB having declared a policy of targeting an inflation rate of 2%. I expect he will once again say that he does not believe that the eurozone economy is at risk of entering a period of deflation, but is still prepared to do what it takes with the tools at his disposal should he need to. German unemployment fell again yesterday further suggesting that Germany would wish to resist any moves by the ECB to introduce more liberal monetary policies, there in a nut shell lies the continued strains within Europe. On Monday the continued divergence between the strength of the German and French economies was demonstrated by the composite PMI data.
Equity markets continue to mark time at the start of the year, which may remain the case for the near future. The VIX continues to show that there is no fear in equities. The FTSE 100 has traded in a range of about 350 points between 6400 and 6750 since about May of 2013, and is once again trading at the top of that range. I am of the opinion that at some stage this year will break out of that range to the upside it's just a question of when. The results of the two events of the next 24 hours could influence whether we break through or drift back again.