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Doha to dictate direction

Market direction on Monday will largely depend on the outcome of the meeting in Doha this weekend. The question is whether oil producers end up agreeing to freeze output. Such a deal would possibly support oil prices even with a global glut. Given recent correlations between oil prices and risk assets, any disappointment could send equities sharply lower in tandem with the price of oil.

UK unemployment is expected to remain low at 5.1% when it’s released on Wednesday. Wage growth should also remain reasonably static, which will likely encourage some MPC members into cutting interest rates in the run up to, or indeed the aftermath of the EU referendum.

The ECB is also unlikely to do much on Thursday. Given the push back from some quarters, especially from Germany, the idea that even deeper negative rates are imminent is likely premature. The rebound in oil prices has helped stave off several months of negative inflation prints for now, but we can expect Draghi to continue driving home the point that central banks cannot garner growth without some degree of fiscal stimulus. The EURUSD has retreated from recent resistance levels, but these may once again become pertinent in the event of a less than dovish-enough Draghi.

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