FOMC minutes contain few surprises; short-term picture unchanged

•     FOMC minutes contain few surprises; short-term picture unchanged

–    Committee sees weak Q1 growth as “in part” caused by weather, port strike; September rate hike still possible if the data support it

–    No change in Fed funds expectations for 2015; longer-dated expectations fell slightly as investors assume long-term neutral Fed funds rate may be a bit lower

–    Gap between FOMC, market is extremely wide; I expect market expectations will have to be revised up, boosting dollar strength

•     China PMI rises but below expectations; Japan does better

–    HSBC China manufacturing PMI rises to 49.1 from 48.9, but below expectations; still shows manufacturing contracting = AUD-negative

–    Japan manufacturing PMI rises to 50.9 from 49.9 = now showing expansion. Tokyo stocks, USD/JPY higher

•     Today:

–    Eurozone: Preliminary manufacturing PMIs for Germany, France & Eurozone. Expectations are for slight decline, which could be EUR-negative. ECB minutes.

–    UK:  Retail sales for April.

–    US: Markit PMI expected to show faster expansion, Phili Fed index seen rising, Conference Board leading index for April seen higher, existing home sales seen up = generally positive indicators expected. Could lift USD further.