Once again we saw US stocks make new record highs after fairly dovish comments from Fed Presidents Bullard and Dudley played down the prospects of any form of tapering of asset purchases in the near term. As such while stocks continue to be embarking on escape velocity the outlook for the global economy remains anything but clear cut, with debates continuing to rage about the complete disconnect between equity markets and the underlying economy. While Dudley's dovish comments weren't that much of a surprise, Bullard's overly dovish tone was, and his robust defence of the merits of QE was taken as a sign that maybe markets are expecting far too much from this afternoon's Fed minutes, as well as Bernanke's testimony to Congress. Certainly the recent uneven nature of US economic data hasn't supported the prospect of a paring back in the scale of asset purchases, and Mr Dudley also reminded investors that the Fed is prepared to go either way with respect to the current asset purchase program, which took some of the steam out of some of the recent US dollar strength, as well as knocking 10 year treasury yields back from near the 2% level. Fed watchers also appear to be split on what the most important event from today will be given Bernanke will be speaking prior to the release of the minutes. The Fed Chairman is highly unlikely to go "off message" ahead of the release of the minutes, and is likely to cite the uncertain economic outlook, while appearing to be neither overly bullish nor bearish on the state of the US economy. The minutes are likely to point to a lively debate about tapering, however given that most of the noise has come from non-voting members of the committee; the focus is likely to be on any shift in stance on the part of the voting members. Before these events we have a plethora of UK data due out in the wake of yesterday's weaker than expected inflation numbers for April which also prompted some sterling weakness as markets looked to price in the prospect of the possibility of further easing measures. While the prospect of further easing in the near future continues to remain unlikely, given the recent improvement in UK economic data, markets continue to derive some mileage out of it. Today's April economic data is likely to point to a slowly improving economy with retail sales expected to come in at 0.1%, an improvement on March's 0.7% decline, and public sector borrowing to fall from £15bn to £8.5bn. The main focus is likely to be on the Bank of England minutes and whether or not in light of the recent improvement in some of the economic data. While we aren't expecting any surprises, there is one scenario which could provoke a response even if it doesn't seem that likely. The scenario is to do with the voting intentions of the three doves on the committee, and while what I'm suggesting may not seem likely I'm going to put it out there. These three of Fisher, King and Miles, have all called for an extra £25bn worth of QE. In light of the recent improvement in UK data could one or more of them be tempted to reverse their calls for this extra stimulus? EURUSD - the recent pullback is currently struggling to overcome resistance at 1.2940, and while we stay below this level the market remains susceptible to pullbacks towards the 1.2800 level. The twin lows at 1.2750, which we last saw in March and April, remain the key support and while above here the risk remains for a move back towards 1.3020, and the 200 day MA on a break above 1.2940. GBPUSD - the pound slid back below 1.5160 yesterday on the weaker CPI, however while we remains above the April lows at 1.5030 we remain vulnerable to a short squeeze back towards 1.5280. We need to see a move back through 1.5280 and this week's high to stabilise and suggest a move back to the 1.5400 level. The 1.5030 level remains the main obstacle to a move back to the lows this year at 1.4830. EURGBP - we broke above the trend line resistance at 0.8500 from the March highs at 0.8795 but have so far been unable to push beyond the 200 week MA which continues to cap the upside and remains the main obstacle to a move higher towards 0.8580 Only a break below 0.8400 has the potential to open up a move towards 0.8320 trend line support from the 0.7755 low. USDJPY - the US dollar could have found a short term top at 103.30 and could well see a drift back towards the 100 area. The next target remains for a move towards the 105.50 area, but it might take a while to get there. This 61.8% retracement of the 124.15/75.30 down move is the next obstacle towards a move towards 110.00. Given we have now broken the 100 level any pullbacks are likely to find support at the April highs. Only back below 99.80 retargets 98.50. CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. 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