In the past couple of weeks the markets have been dominated by two related trends in two different markets, moving in opposite directions – a fall in commodities and a rise in the US dollar.

The price of commodities has fallen on speculation that demand will slow amid a global slowdown. Speculation certainly looks to have waned in the oil market, after oil producer group OPEC forecast lower demand for the fuel, prompting crude down to below $114 a barrel.

Meanwhile, as economists see improved prospects for the US economy, the dollar becomes more attractive as an investment. The stronger dollar touched a half-year high against the euro of $1.47 and a two year high against Sterling of $1.85. Consequently, gold has lost its lustre, falling back to below $800 an ounce for the first time since Dec 2007 while many industrial metals, such as Copper and Aluminium, are close to a six month low. Indeed, last week finished with more good news on the US economy. Industrial output edged higher in July, up 0.2% on the previous month, a little faster than expected (in contrast to negative eurozone GDP). Elsewhere, there was a bounce in US consumer confidence on the back of falling fuel prices in August as measured by the University of Michigan poll.

The only data of any merit today is the US National Association of Housebuilders (NAHB) index for August (18:00 BST) - where a slight pick up in optimism is expected after an all time low in the previous month.

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