The eurozone will dominate the week ahead, and a rating cut from the European Central Bank is on the cards, says Barclays Wealth equity strategist Henk Potts.

Summary

- Policy, not data, has been the focus this last week
- A euro 'muddle through' is still feasible, but markets may not agree soon
- The attempted US stimulus looks larger and craftier than expected
- After the Swiss National Bank's move, there is one fewer safe haven out there

Equities

- The varying compositions of markets over time makes accurate forecasting difficult
- A more sustainable returns profile should lead to more resilient earnings than in the past

Fixed Income

- German high court ruling pushes back the European Financial Stability Facility timeline
- The ECB employs a dovish tone, suggesting a rate cut may be on the agenda
- For the moment, the Fed is watching, not acting

Currencies

- The Swiss National bank puts a floor under EUR/CHF at 1.20
- The Norwegian kroner is not likely to replace the franc as a safe haven currency
- Downside risks to the euro increased

Commodities

- An intensification of the euro area crisis would initially cause a sell-off in commodities
- But emerging market demand, a key driver, would likely support prices in the long term
- With fewer alternatives as safe-haven assets, gold prices are likely to remain elevated