Daily Market Analysis by Vinson Financials

[VinsonFinancialsFX]

​

Financial News December 7, 2015


Daily Economic Outlook: 7th December, 2015
The industrial production data in German for October is scheduled to release today. The reading will give an indication of the Q4 GDP outlook.

"Following two months of consecutive decline, we forecast an increase of 0.8% m/m in October.

A significant contribution to this pickup is expected to come from a rebound in manufacturing output", states Lloyds Bank.

Last week, the U.S. employment report for November posted better than expected result. The robust employment report along with FOMC members' recent statements supports the markets expectation of Fed's first rate hike after June 2006. As the markets are expecting Fed's rate hike decision next week, market is expected to be silent this week. St. Louis Fed President Bullard is expected to support a rate rise at the December meeting in his today's comment.

Market Review December 7, 2015


The United States unemployment rate remained unchanged at 5.0% and the economy created 211,000 jobs in November, a healthy result that further increases the likelihood of an interest rate hike by the Federal Reserve later this month. Moreover, in its November 2015 Employment Situation report, released last Friday, the Labour department revised its employment figures for September and October, saying 35,000 more jobs were created than initially estimated. Wages also grew for the month, though at a slower pace than in October. Average hourly earnings climbed 4 cents, equating to a 2.3% annualized gain. The focus of the month is turned now on the FOMC meeting next week with the markets pricing in a 79% chance of a hike.

Elsewhere, Oil price slides after OPEC failed to agree on production cuts. More specifically, the cost of a barrel of US crude oil has fallen by almost 1% to $39.61, below the $40 barrel mark. Furthermore, the Organization of the Petroleum Exporting Countries (OPEC) failed to agree on an oil production ceiling last Friday after a disagreement between Saudi Arabia and Iran meant that the group for the first time in decades did not even mention an output quota, which previously stood at 30 million barrels per day (bpd).

Released during the Asian session this morning, ANZ Job Advertisements rose 1.3% versus the previous of 0.3%, while Japans’ Leading Indicators rose 102.9% as widely expected.

Released during the early European session, German Industrial Production rose just 0.2% missing the estimated 0.8% and causing insignificant impact on the EUR/USD, which is currently trading near the 1.0845 area after reaching as high as the 1.0980 level during the last week. Released from Switzerland during the session, Foreign Currency Reserves came in at 563B compared to the previous of 551B.

The key events for the day would be the Eurogroup Meetings, BOE Governor Carney speech and BOJ Governor Kuroda Speech.

Additional economic releases would be the Sentix Investor Confidence, the United States Labour Market Conditions Index and Consumer Credit.

View our full economic calendar for a daily roundup of major economic events.


Data releases to monitor:
EUR: Sentix Investor Confidence, Eurogroup Meetings.

GBP: BOE Gov Carney speech.

USD: Labor Market Conditions Index, Consumer Credit.

JPY: BOJ Gov Kuroda speech.

NZD: Manufacturing Sales.

Trade Idea of the Day

GBP/AUD

Currently the pair is trading at 2.0595. Traders must monitor the 2.0955 resistance level and the support level 2.0340 for possible breakouts. A possible scenario would be a movement towards the 2.0720 resistance level, where a break may lead to the 2.0825 area. An alternative scenario could be a movement towards the 2.0485 support level, where a break may lead to the 2.0390 area.

 

[VinsonFinancialsFX]

​

Financial News December 8, 2015


ECB may easy monetary policy further
Euro area is expected to post a sluggish growth rate in 2016. Rising non-performing loans, higher corporate and private debt, lack of significant economic reforms, and downward trend in housing prices in Italy and France hints weak economic momentum in the euro zone.

The economy is expected to grow at 1.3%, and core inflation rate would be at 1% in 2016, estimates Commerzbank.
Since weaker economic growth rate is foreseen in the euro area next year, the central bank may opt for further monetary easing.

"We envisage a further reduction of the deposit rate by 0.1 percentage points to -0.4%, possibly at the March meeting. In addition, the ECB could again push the earliest date for an end to asset purchases beyond the current date of March 2017", says Commerzbank in a research note.

Market Review December 8, 2015


The Asian session this morning was rather busy with economic releases from Japan, Australia and China. Released from Japan, Current Account came in at 1.49T versus the estimated 1.53T while Final GDP rose 0.3% beating the estimated 0.1%. Moreover, Bank Lending rose 2.3% compared to the previous of 2.5%, Final GDP Price Index rose 1.8% versus the estimated 2.0% and Economy Watchers Sentiment came in at 46.1 missing the estimated 4.6. USD/JPY is currently trading near the 123.10 area with the next resistance seen at the 123.65 level. Released from Australia, NAB business confidence rose to 5 in November compared to the previous of 3. The Chinese economic data was once again not so encouraging, as Trade Balance came in at 343B versus the estimated 395B and USD-Denominated Trade Balance came in at 54.1B versus the estimated 64.2B.

Elsewhere, Crude Oil plunged to new 6-year lows on Monday, the trading day after OPEC decided to lift their output target, which pushed the price of Oil below the August 24th low. WTI is staying soft below $38 for the moment as markets saw OPEC's move as effectively abandoning the strategy of limiting productions.

Released during the early European session French Gov Budget Balance came in at -76.2B while French Trade Balance came in at -4.6B versus the estimated -3.3B. EUR/USD is currently trading near the 1.0865 area with the next support seen at the 1.0796 level.

The key events for the day would be the United Kingdom Manufacturing Production and Industrial Production, the Canadian Building Permits and Housing Starts.

Additional economic releases would be the ECOFIN Meetings, NIESR GDP Estimate, JOLTS Job Openings and BOC Gov Poloz speech.

Data releases to monitor:
EUR: Revised GDP, ECOFIN Meetings.

GBP: Halifax HPI, Manufacturing Production, Industrial Production, 30-y Bond Auction, NIESR GDP Estimate.

USD: NFIB Small Business Index, JOLTS Job Openings, IBD/TIPP Economic Optimism.

CAD: Housing Starts, Building Permits, BOC Gov Poloz speech.


Trade Idea of the Day

NZD/JPY

Currently the pair is trading at 81.85. Traders must monitor the 83.35 resistance level and the support level 79.95 for possible breakouts. A possible scenario would be a movement towards the 81.25 support level, where a break may lead to the 80.70 area. An alternative scenario could be a movement towards the 82.05 resistance level, where a break may lead to the 82.65 area.

 

[VinsonFinancialsFX]

​

Financial News December 9, 2015


Daily Economic Outlook: 9th December 2015

The Bank of England will draw domestic markets' attention as November Financial Policy Committee meeting of the Bank is scheduled today. The minutes of the meeting will provide the view of the Bank on risks to the UK's financial system amid slowdown in emerging markets and current account deficit of the economy, which remains close to a record high.

In euro area, German's trade balance data for October are scheduled to release. The figures will be watched closely as they will indicate the growth outlook of the economy in Q4.

"Today's speeches by the ECB Council members Lautenschlaeger, Nowotny and Hansson may shed some light on last week's surprisingly tepid ECB policy loosening, while the RBNZ are expected to trim the cash rate by 25bp to 2.5% later tonight", says Lloyds Bank.
Market Review December 9, 2015


Consumer confidence has slipped after two cheerful months, according to the latest Westpac Melbourne Institute sentiment index, as the cooling housing market, talk of a rise in the GST (Goods and Services Tax) and worries about family finances began to display their impact. Westpac Consumer Sentiment index declined -0.8% this month, from 101.7 points in November to 100.8 points, seasonally adjusted. Released also from Australia during the Asian session, Home Loans eased 0.5% versus the estimated -1.0%. AUD/USD is currently trading near the 0.7225 area with the next support seen at the 0.7185 level.

Released from Japan during the Asian session this morning, Core Machinery Orders unexpectedly rose 10.7% in October, posting a second straight month of gains, in a sign of a delayed pickup in business investment. Moreover, Prelim Machine Tool Orders declined -17.9% compared to the previous of -22.9% and BOJ M2 Money Stock rose 3.3% missing the estimated 3.5%. The Japanese Yen seems to be gaining against the US Dollar as the USD/JPY pair fell to the 122.70 area.

Elsewhere, Switzerland's unemployment rate held steady for yet another month in November. More specifically, Unemployment Rate rose 3.4% as widely expected and in line with the previous data. Released from Germany during the early European session, Trade Balance came in at 20.8B beating the estimated 19.2B. EUR/USD rose to the 1.0915 area after breaking the 1.0900 level.

The key events for the day would be the RBNZ Rate Statement, Official Cash Rate and Press Conference.

Additional economic releases would be the FPC Meeting Minutes and Crude Oil Inventories.

Data releases to monitor:

GBP: FPC Meeting Minutes.

USD: Wholesale Inventories, Crude Oil Inventories, 10-y Bond Auction.

NZD: Official Cash Rate, RBNZ Rate Statement, RBNZ Monetary Policy Statement, RBNZ Press Conference.


Trade Idea of the Day

GBP/USD

Currently the pair is trading at 1.5037. Traders must monitor the 1.5158 resistance level and the support level 1.4894 for possible breakouts. A possible scenario would be a movement towards the 1.5100 resistance level, where a break may lead to the 1.5135 area. An alternative scenario could be a movement towards the 1.4995 support level, where a break may lead to the 1.4950 area.

 

[VinsonFinancialsFX]

​

Financial News December 11, 2015


Checking on FED rate hike probabilities
US Federal Reserve will be meeting on December 15th-16th, to decide on whether to hike rates or not. Market pricing of rate hike has somewhat softened after reaching as high as 84%.

However hike expectations over next year for subsequent have firmed somewhat.
Let's look at the market pricing of hikes over next few meetings.

Current FED interest rate is at 0 - 0.25%.

December, 2015 meeting - Market is attaching 28% probability that rates will remain 0 - 0.25% and 72% probability that rates will move to 0.25-0.5%.
January, 2016 meeting - Market is attaching 23% probability that rates will remain 0 - 0.25% , 65% probability that rates will move to 0.25-0.5% and 12% probability that rates will be at 0.5-0.75%.
March, 2016 meeting - Market is attaching 11% probability that rates will remain 0 - 0.25% , 38% probability that rates will move to 0.25-0.5%, 39% probability that rates will be at 0.5-0.75% and 6% probability that rates will be at 0.75-1%
April, 2016 meeting - Market is attaching 9% probability that rates will remain 0 - 0.25% , 38% probability that rates will move to 0.25-0.5%, 40% probability that rates will be at 0.5-0.75%, 12% probability that rates will be at 0.75-1% and 1% probability that rates will be at 1-1.25%.
June, 2016 meeting - Market is attaching 6% probability that rates will remain 0 - 0.25% , 28% probability that rates will move to 0.25-0.5%, 39% probability that rates will be at 0.5-0.75%, 21% probability that rates will be at 0.75-1% and 5% probability that rates will be at 1-1.25%.


Market Review December 11, 2015


Asian session pasted without any major events and unexpected moves after yesterday central banks day both BOE and SNB behave as forecasted and kept the rates unchanged. Oppose to Fed and ECB monetary policy the BOE showed more calm regarding any changes in monetary policy and reiterated yesterday that it remains in no rush to change interest rates. Furthermore, the UK policymakers said they would not match an expected rate hike by the FED next week, stressing there was “no mechanical link” with its thinking. GBP after the BOE comments weakened against the USD however, analysts commented that GBPUSD pair still looks bullish in the medium term.

SNB also kept the rate unchanged and the official report states that the target range for the three-month Libor remains between –1.25% and –0.25%, and the interest rate on sight deposits with the SNB is unchanged at –0.75%. The negative interest rate and the interest rate differential with other currencies make the Swiss franc less attractive, and continue to help weaken it however analysts say that the CHF is still significantly overvalued. Moreover, the SNB will remain active in the foreign exchange market in order to influence the exchange rate situation, as necessary.

Looking ahead the US Retails Sales will be the highlight of the day where is forecasted to be at 0.2%. Furthermore ECB Targeted LTROmay move the market. In economic releases so far we had the German CPI final at 0.15. From China M2 Money Supply y/y at 13.7% and New Loans at 709 billion.


Data releases to monitor:

GBP: Construction Output m/m, Consumer Inflation Expectations, MPC Member Weale Speaks

EUR: Targeted LTRO, Italian Quarterly Unemployment Rate

USD: Core Retail Sales m/m, Retail Sales m/m, PPI m/m, Core PPI m/m

Trade Idea of the Day

EUR/USD

Currently the pair is trading at 1.0965. Traders must monitor the 1.1096 resistance level and the support level 1.0795 for possible breakouts. A possible scenario would be a movement towards the 1.0940 support level, where a break may lead to 1.0910 level and possible to 1.0860. An alternative scenario could be a movement towards the 1.0980 resistance level, where a break may lead to the 1.1030.

 

[VinsonFinancialsFX]

​

Financial News December 14, 2015


EUR/USD likely to be at 0.95 by end-2016
European Central bank's rhetoric might at the December meeting might come at a long-term cost to EUR , while EUR/USD was forecasted higher last week.

"We continue to forecast EUR/USD at 0.95 by end-2016", says Barclays in a research note.

The year 2016 looks prepared for higher volatility in EUR/USD. While the Greek crisis has abated, there is a new escalation of tensions around most of highly-indebted EA countries are still a key risk as there is mounting up opposition to rising immigration and fiscal austerity.

After the ECB meeting, the longer term inflation expectations in the market also dropped, with most recent flash estimate of HICP inflation disappointing significantly, which should be confirmed at 0.9% yoy, while previously it was at 1.1% yoy.

Currently EUR is trading at 1.0965 against US dollar.

Market Review December 14, 2015


The Asian session this morning was rather quiet despite the long awaited anticipated event from the FOMC on Wednesday. Released during the session, Japan's December tankan survey showed big manufacturers index +12 beating the estimated +11, while Tankan Non-Manufacturing Index came in at +25 beating the estimated +23. Moreover, Japanese Revised Industrial Production rose 1.4%, as expected by economists and Tertiary Industry Activity rose 0.9% versus the estimated 0.5%. USD/JPY is currently trading near the 121.30 area with the next support seen at the 120.56 level.

The United States Federal Reserve is expected to start raising interest rates on Wednesday, in the first such move since 2006. The anticipated economic move has been described as “momentous” and a hugely significant milestone of progress in the repairing of the US economy since the damage done by the Great Recession. Furthermore, Janet Yellen, the Fed’s chair, had signalled that the central bank could raise interest rates from their record low of 0.25% in September, however the downturn in the Chinese economy and the resulting turmoil in financial markets, persuaded the Fed to change their mind and keep the current interest rates. The FOMC are due to hold their December policy meeting on Tuesday and Wednesday this week, the scene has been carefully set for the first increase in US interest rates for almost a decade.

Elsewhere, late on Friday, the China Foreign Exchange Trade System (CFETS), a sub-institutional organization of the People's Bank of China (PBOC), introduced a new exchange rate index that will see the Yuan (CNY), or renminbi, valued against a basket of 13 trade-weighted currencies. Furthermore, it is not clear if the PBOC will ever formally tie the Yuan to this gauge but CFETS did say the basket includes both G3 and Asian currencies. The Chinese government believes that "the bilateral renminbi-USD exchange rate is not considered a good indicator of the international parity of tradable goods". Introduction of the index would help gauge renminbi’s performance against a basket of trade-weighted currencies as "a basket of currencies can better capture the competitiveness of a country's goods and services, and better enable the exchange rate to adjust".

The key events for the day would be the Eurostat Industrial Production, ECB President Draghi speech and MPC Member Shafik speech.


Data releases to monitor:

GBP: MPC Member Shafik speech.

EUR: Industrial Production, ECB President Draghi speech.

Trade Idea of the Day

EUR/GBP

Currently the pair is trading at 0.7229. Traders must monitor the 0.7279 resistance level and the support level 0.7163 for possible breakouts. A possible scenario would be a movement towards the 0.7254 resistance level, where a break may lead to the 0.7275 area. An alternative scenario could be a movement towards the 0.7207 support level, where a break may lead to the 0.7175 area.

 

[VinsonFinancialsFX]

​

Financial News December 15, 2015


Fed's second rate hike likely in April, 2016

The FOMC meeting on policy decission is scheduled tomorrow. The Fed is expected to hike rate for first time after almost 10 years. Looking forward, analysts foresee a series of rate hikes next two years.

Some economic indicators hint the economy will rebound in Q4. Moreover, WTI crude oil is currently trading 10 dollars below FOMC target at USD36 per barrel.Further fall in oil prices will mire the EMs in crisis as corporate debt and bankrupties in the commodity sector. The FOMC is expected to take a cautious monetary majors.

"We expect the second and third hikes to take place in April and September next year, respectively (every third meeting). The fourth hike is likely to come in December. In 2017, we expect a hike every other meeting (March, June, September and December)", argues Danske Bank.

Market Review December 15, 2015


The Reserve Bank of Australia released during the Asian session this morning its December meeting minutes. In the text, the central bank suggested that the central bank is in no hurry to cut interest rates. Furthermore, RBA said that recent flow of domestic data had generally been positive. In addition, output growth is expected to strengthen gradually over the next two years. Core inflation rates remained stable, but generally below the central bank’s target. The RBA said that the Australian Dollar is adjusting to significant declines in key commodity prices and boosting demand for domestic production. The central bank reiterated that the outlook for inflation might afford "some scope for a further easing of monetary policy". Moreover, the board will continue to assess the outlook and judge whether or not the current state of monetary policy is most effective for sustaining growth. Overall, the meeting minutes likely further weighed on RBA rate cut bets. The document appeared to justify the central bank’s relatively neutral monetary policy tone. Released also from Australia during the session, House Price Index (HPI) rose 2.0% versus the estimated 2.1% while New Motor Vehicle Sales rose 1.0% compared to the previous -3.7% decline. AUD/USD rose slightly, reaching as high as the 0.7283 level and currently is trading near the 0.7245 area.

Released during the early European session, Switzerland’s Producer Price Index (PPI) rose 0.4% beating the estimated 0.1%.

The economic calendar for the day is rather busy with economic releases from the United Kingdom the United States, New Zealand, Canada and the Eurozone. The key events would be the United Kingdom inflation data, German ZEW Economic Sentiment, Canadian Manufacturing Sales, New Zealand’s GDT Price Index and the United States CPI and Core CPI.


Data releases to monitor:
GBP: CPI, MPC Member Haldane speech, PPI Input, RPI, Core CPI, HPI, PPI Output, BOE Quarterly Bulletin, CB Leading Index.

EUR: German ZEW Economic Sentiment, ZEW Economic Sentiment, Employment Change.

CAD: Manufacturing Sales, BOC Gov Poloz speech.

USD: CPI, Core CPI, Empire State Manufacturing Index, NAHB Housing Market Index, TIC Long-Term Purchases.

NZD: GDT Price Index, Current Account.

Trade Idea of the Day

GBP/AUD

Currently the pair is trading at 2.0903. Traders must monitor the 2.1213 resistance level and the support level 2.0554 for possible breakouts. A possible scenario would be a movement towards the 2.0805 support level, where a break may lead to the 2.0690 area. An alternative scenario could be a movement towards the 2.0962 resistance level, where a break may lead to the 2.1072 area.

 

[VinsonFinancialsFX]

​

Financial News December 16, 2015


Unemployment report to set mood for Pound heading into FOMC

Since Bank of England (BOE) published its inflation report, suggesting no hike required from BOE in 2016, to keep inflation in check, pound has been struggling. After last week's dovish monetary policy statement, it's even struggling to clear 1.52 resistance area.

Last night, stronger Dollar ahead of FOMC, just pushed pound few pips away from 1.5 support area.

ILO unemployment reading to publish around 9:30 GMT today.

- As of now unemployment rate in UK stands at 5.3% and median estimate says it will remain so in today's reading.

- Once again major focus will be on earnings growth,since BOE policymakers in several instances announced they will be looking at wage growth component and current rate is not sufficient to generate targeted inflation. This component has gained sharply since last year, however slowed down somewhat in recent reading. In three months to September, average earnings excluding bonus rose by 2.5%, lower than 2.9% seen in July.

- Today market is expecting slowdown further in earnings growth at 2.3% excluding bonus but to grow 2.5% including it.

Impact -

- Data, coming as expected, may not be very bullish for Pound as Bank of England (BOE) mentioned that current wage growth is not sufficient to give a rise in inflation.

- However any wage growth below 2.3% likely to sour sentiment.

- With better report, expect Pound to have better sentiment heading into FOMC.

Market Review December 16, 2015


Janet Yellen, the chair of the Federal Reserve, has clearly signalled that the United States central bank is preparing to “normalise” policy, at its final meeting before the end of the year. Furthermore, the latest inflation data, published on Tuesday, which was in line with expectations at 0%, seems that has removed any final obstacles to a hike. Currently, the market has almost fully priced in a Fed funds rate hike of 25 Bps. Anything other than this should be a huge surprise and will possibly trigger great volatility in the financial markets. Moreover, if the FOMC don’t take action at a time when there is almost universal market expectation for a rate hike, Federal Reserve credibility will likely have never sunk to a lower level. In addition, if Janet Yellen and her colleagues highlight the remaining threats on the US economy, the rate hike will be viewed as a “dovish hike”, suggesting policymakers are more worried about growth than inflation, and reassuring markets that have become dependent on central bank support. The dollar came off a near one-week high versus the other major currencies today, but its losses were limited as the market counted down the hours to a likely hike in U.S. interest rates.

Released during the Asian session, MI Leading Index declined -0.2% compared to the previous rise of 0.1%, while Japan’s Flash Manufacturing PMI came in at 52.5 versus the previous of 52.6. USD/JPY rose to the 121.90 area after dipping to the 120.35 area yesterday.

Released during the early European session, French Flash Manufacturing PMI came in at 51.6 beating the estimated 50.6 and French Flash Services PMI came in at 50.0 versus the estimated 50.7. In addition, German Flash Manufacturing PMI came in at 53.0 versus the expectations of 52, while German Flash Services PMI came in at 55.4 versus the estimated 55.5. EUR/USD is currently trading near the 1.0935 area with the next support seen at the 1.0904 level.

The key events for the day would be the Federal Funds Rate decision, the FOMC Statement and Press Conference.

Additional economic releases would be the United Kingdom Average Earnings Index, Claimant Count Change and Unemployment Rate. New Zealand GDP and the Eurozone inflation report.

View our full economic calendar for a daily roundup of major economic events.


Data releases to monitor:
GBP: Average Earnings Index, Claimant Count Change, Unemployment Rate.

EUR: Flash Manufacturing PMI, Flash Services PMI, Final CPI, Final Core CPI, Trade Balance.

CAD: Foreign Securities Purchases.

USD: Federal Funds Rate, FOMC Press Conference, FOMC Statement, FOMC Economic Projections, FOMC Press Conference, Crude Oil Inventories, Flash Manufacturing PMI, Industrial Production, Capacity Utilization Rate, Housing Starts, Building Permits.

NZD: GDP.

CHF: SNB Quarterly Bulletin, ZEW Economic Expectations.

Trade Idea of the Day

EUR/JPY

Currently the pair is trading at 133.31. Traders must monitor the 134.21 resistance level and the support level 132.43 for possible breakouts. A possible scenario would be a movement towards the 133.53 resistance level, where a break may lead to the 133.90 area. An alternative scenario could be a movement towards the 132.85 support level, where a break may lead to the 132.55 area.

 

[VinsonFinancialsFX]

​

Financial News December 17, 2015


Four rate hikes by Fed likely next year

After almost a decade the Fed initiated its monetary tightening policy with 25 base point rate hikes yesterday. The labor market showed a sign of improvement and economic growth rate on track.

The unemployment rate started falling; experts believe that the unemployment rate will be below target level during 2016 - 18.
With the expansion of labor market and stronger US dollar, the inflation rate is expected to increase further. The annual core CPI inflation was recorded at 2.0% year on year in November.

"We anticipate that the Committee will increase the Fed Funds Rate four times in 2016 and another four times in 2017. Key to this view will be continued momentum in the labour market and a firming in global growth; both are necessary to mitigate downside risks to the outlook" says Westpac in a research note.

Fed rate hike a temporary gain for Asia local markets
After almost a decade, the Fed initiated its monetary tightening policy with a 25 base point rate hike yesterday, as expected. The Fed Chair Yellen indicated that the central bank is on the path of policy tightening, and it will increase its policy rate gradually.

The FX, equity, and bond markets started reacting to the rate hike. The EM local currency and bond markets are positively reacted to the rate hike, and similar reaction is foreseen in EM Asia in the near future.

"The improvement in risk appetite following the Fed hike also helped EM currencies to absorb the hike easily. In the near term as trading winds down for the year and flows thin, there may be further respite for EM Asia currencies, but we do not expect this to persist into 2016", states Barclays in a research note to its client.

Market Review December 17, 2015


The Federal Reserve voted unanimously yesterday to raise interest rates by a quarter point (25Bps), marking the first increase in more than nine years. The bank raised its fed funds rate to a range of 0.25% to 0.50%, ending an unprecedented seven-year run of near-zero interest rates. The vote was 10-0. The board of directors also raised the discount rate to 1% from 0.75%. Moreover, the Fed said it will "carefully monitor" actual inflation in light of 'current shortfall." Furthermore, the FOMC stated in its statement "Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate." In addition, the Federal Open Market Committee said that interest rates are only likely to increase in a "gradual" manner, ending up at a long-run target of 3.5%.

At a press conference following the announcement of the rate hike, Janet Yellen said that people should know that the Fed’s decision “reflects our confidence in the economy.” While economic conditions vary across regions and across industries, “we see an economy that is on a path of sustainable improvement,” Yellen went on. “I hope they take it as a signal that conditions will continue to strengthen, and jobs prospects will be good.” While she pointed out that the Fed will not rush into further hikes, and that it would monitor closely what was happening to the inflation rate. Moreover, Fed Chair Yellen dismissed concerns about the economy slipping back into recession. “I feel confident about the fundamentals driving the economy,” she said. She pointed to a healthy employment picture by mentioning that 2.3 million new jobs were created this year and strong growth in household demand, particularly for new cars and trucks. There is always the possibility that a negative shock will hit the economy, Yellen conceded, but she said that she did not see anything to be overly concerned about at the moment. After the Fed decision, US stocks surged sharply, with the DJIA rising 224 pts to close at 17749 and the S&P 500 rising to the 2077 level. On the other hand, EUR/USD spiked up to the 1.1010 area before dropping to the 0.0830 area.

Elsewhere, the Hong Kong Monetary Authority raised its base rate for the first time in nine years, following the U.S. Federal Reserve’s lead overnight, and flagged the risk of rising capital outflows from the city. The key rate was raised to 0.75% from 0.50% the Hong Kong Monetary Authority said as Hong Kong’s currency is pegged to the U.S. dollar, which typically means that Hong Kong’s monetary policy moves in line with the Fed.

Released during the Asian session today, Japan’s Trade Balance came in at 0.00T versus thee estimated -0.21T causing insignificant impact on the USD/JPY, which is currently trading near the 122.40 area.

The key events for the day would be the German Ifo Business Climate, ECB Economic Bulletin, the United Kingdom Retail Sales and the United States Unemployment Claims and Philly Fed Manufacturing Index.


Data releases to monitor:
GBP: Retail Sales, CBI Industrial Order Expectations.

EUR: German Ifo Business Climate, ECB Economic Bulletin, Italian Trade Balance.

USD: Philly Fed Manufacturing Index, Unemployment Claims, Current Account, CB Leading Index, Natural Gas Storage.

Trade Idea of the Day

EUR/AUD

Currently the pair is trading at 1.5098. Traders must monitor the 1.5340 resistance level and the support level 1.4950 for possible breakouts. A possible scenario would be a movement towards the 1.5042 support level, where a break may lead to the 1.4990 area. An alternative scenario could be a movement towards the 1.5146 resistance level, where a break may lead to the 1.5210 area.

 

[VinsonFinancialsFX]

​

Financial News December 18, 2015


Daily Economic Outlook: 18th December 2015

The market experts are still busy in assessing impact of the Fed's first rate hike in almost 10 years. Therefore, other indicators may not get much importance from market.

In the United States, US Markit services PMI survey for December and Kansas City Fed manufacturing survey for December are due today.

Richmond Fed President Lacker expected to speak on the 2016 economic outlook at the Charlotte Chamber of Commerce will be watched closely.
In euro area, no major indicators are scheduled to release today except November inflation and current account figure for October.

Market Review December 18, 2015


The Bank of Japan surprised the markets today by voting 6-3 to increase purchases of exchange-traded funds (ETFs) and lengthening the maturity of bonds it purchases to encourage investment in the economy. The BOJ announced that under the new program, it will purchase ETFs at an annual pace of 300 billion yen composed of stocks issued by firms "proactively" investing in physical and human capital. The plan will start with purchases of ETFs tracking the JPX-Nikkei Index 400, which screens for factors including corporate governance and investor-focused management. The new ETF purchase program will begin in April 2016 and is in addition to the current ETF purchase program of around 3 trillion yen annually. Moreover, the BOJ held rates steady and said it will stick to its plan to increase the monetary base by 80 trillion yen a year, as expected. USD/JPY spiked up to the 123.57 level before dropping to the 121.80 area, where is currently trading.

Elsewhere, Business confidence in New Zealand has improved to its highest level in eight months, according to ANZ Bank's latest business sentiment survey. More specifically, a net 23 percent of respondents in December expected the economy to improve over the coming year, compared with 14.6 percent the month before. Companies were also more upbeat about their own business outlook, with a net 34.4 percent expecting an improvement in their activity over the coming year, from 32 percent in November.

The economic calendar for the day would be rather empty with the key events to be the Canadian Consumer Price Index, Core CPI and the United States Flash Services PMI.


Data releases to monitor:
CAD: Core CPI, CPI, Wholesale Sales.

EUR: Current Account.

USD: Flash Services PMI, FOMC Member Lacker speech.

Trade Idea of the Day

GBP/AUD

Currently the pair is trading at 2.0859. Traders must monitor the 2.1213 resistance level and the support level 2.0673 for possible breakouts. A possible scenario would be a movement towards the 2.0943 resistance level, where a break may lead to the 2.1037 area. An alternative scenario could be a movement towards the 2.0802 support level, where a break may lead to the 2.0725 area.

 

[VinsonFinancialsFX]

​

Financial News December 21, 2015


FxWirePro: GBP/USD outlook focus for 2016

Pound is declining steadily against Dollar before and also after rate hike from US Federal Reserve of 25 basis points. Before Bank of England (BOE) published its weaker inflation outlook and started producing dovish monetary policy statement, Pound was expected to be the key contender to take the baton from Dollar, while BOE takes it from FED.

Now the popular expectations have shifted and economist are now expecting another few firings from FED, before BOE finally takes over.

Focus will be on inflation statistics as well as wage growth for this year. So far there is only one hawk in BOE board, Ian McCafferty, which we expect to grow by another two till September. Unless situation worsens over China, BOE could be very close to a hike by end of year, which could come into focus post June.

Trade idea -

We have long remained focused to the downside for the pair. Our call to sell GBP/USD @1.52 and 1.54 still active, with stop loss around 1.58 and targeting 1.425 area. Interim targets are 1.49 and 1.475. First one is reached.

In this post, we would like to add another interim target of 1.45-1.445 area.

Market Review December 21, 2015


The Financial markets seem to be getting into the holiday spirit, as no significant market movement was noticed despite Federal Reserve decision last week to lift the interest rates.

Elsewhere, anti-austerity party Podemos and liberal Ciudadanos made big gains as the conservative Popular Party (PP) lost its majority. Spain seems that is heading for political uncertainty after the general election produced a deeply fragmented parliament with little chance of a stable government majority over the next four years. Spain’s next government will be handled a country in the midst of a strong but incomplete economic recovery, with the national output set to grow by more than three per cent in 2016, and unemployment falling steadily over the past two years. Moreover, the jobless rate, at more than 22 per cent, remains one of the highest in the western world, and concern is mounting over inequality and a lack of well-paid, stable jobs. Furthermore, the country has also been shaken by corruption scandals, and by tensions between the government in Madrid and the independence-minded region of Catalonia.

Released during the Asian session, RBNZ Credit Card Spending rose 8.5% versus the previous of 7.8%, while Japanese All Industries Activity rose 1.0% beating the estimated 0.9%. USD/JPY remained near the 121.40 area while NZD/USD near the 0.6740 area.

Released during the early European session, German Producer Price Index (PPI) declined -0.2%, which was in line with the economists’ expectation.

The economic calendar for the day would be rather light with few economic releases. The key events for the day would be German Buba Monthly Report, Eurostat Consumer Confidence and the United Kingdom CBI Realized Sales.


Data releases to monitor:
EUR: German Buba Monthly Report, Consumer Confidence.

GBP: CBI Realized Sales.

Trade Idea of the Day

NZD/USD

Currently the pair is trading at 0.6744. Traders must monitor the 0.6840 resistance level and the support level 0.6635 for possible breakouts. A possible scenario would be a movement towards the 0.6740 support level, where a break may lead to 0.6715 level and possible to 0.6680. An alternative scenario could be a bounce upwards after testing the 0.6740 support towards the 0.6775 resistance level, where a break may lead to the 0.6800.

 

[VinsonFinancialsFX]

​

Financial News December 22, 2015


Firmer USD likely to continue through 2016
After almost a decade, the U.S. Fed decided to hike its bank rate in mid of December. The economy is back on track, as growth rate picked up, and labor market has improved.

On the other hand, the economy is expected to face higher inflationary pressure in near future.
The central bank is expected to deliver four more hikes next year, and thereby capital inflows will intensify. This will inturn strengthen the US dollar in the currency market.

"Every Fed tightening cycle is different and how USD trades depends on the path of rates relative to expectations, the path of rates in the rest of the world, and the reasons why the Fed is hiking, amongst other things. In the current cycle, these factors generally argue for USD strength extending into 2016. We think the forward curve significantly understates the extent to which rates will rise through 2016 and this is against a background where most other central banks are on hold or easing", states RBC Capital Markets.


Market Review December 22, 2015


British consumer morale in December edged up from a six-month low in November, while households remain more worried about the economy than they were at the end of last year. Moreover, GfK said that its monthly consumer sentiment indicator rose to +2 in December from +1 in November, marginally stronger than a median forecast of +1. Furthermore, the Royal Institution of Chartered Surveyors (Rics) states that the lack of housing supply will drive prices up faster than household pay rises with an average 6% rise across the country and 8% in East Anglia. The rise in house prices was also supported by low interest rates and stable economic growth.

Released during the early European session, Swiss Trade Balance came in at 3.14bln versus the estimated 3.82bln, German Import Prices declined -0.2% missing the estimated 0.2% rise and GfK German Consumer Climate came in at 9.4 beating the estimated 9.3. The financial markets are generally quiet this week as we approach the holiday season.

The key events for the day are the United States Final GDP and Existing Home Sales, the United Kingdom Public Sector Net Borrowing and New Zealand’s Trade Balance.


Data releases to monitor:
EUR: German Buba Monthly Report, Consumer Confidence.

GBP: CBI Realized Sales.

Trade Idea of the Day

EUR/USD

Currently the pair is trading at 1.0921. Traders must monitor the 1.1059 resistance level and the support level 1.0802 for possible breakouts. A possible scenario would be a movement towards the 1.0960 resistance level, where a break may lead to the 1.1000 area. An alternative scenario could be a movement towards the 1.0862 support level, where a break may lead to the 1.0830 area.

 

[VinsonFinancialsFX]

​

Financial News December 23, 2015


Key extracts from OPECs World Oil Report
Oil producing nations' cartel OPEC has revised its demand estimate in its latest World Oil Outlook, however has warned over declining investments. OPEC demand projections are still higher than those projected by International Energy Agency (IEA).

Saudi Arabia, also, few days back warned on declining investments posing challenge to future energy security.
According to OPEC, from here till 2040, every year $400 billion investments are required to keep supply in line with rising demand. According to the cartel, demand is likely to come from emerging market economies, namely China and India. Overall global demand is likely to increase by 18 million barrels/day by 2040 to 109.8 million barrels per day. This figure, is however 1.3million barrels/day lower from previous projections, probably taking into account recent climate accord in Paris. Figure is still higher from IEA projections of 103.5 million barrels/day.

In the medium term however it feels, oil demand to rise from current 92.8 million barrels/day in 2015 to 97.4 million barrels/day by 2020.

On the supply side, the organization expects non-OPEC production to rise to 61.5 million barrels/day by 2025 but decline to 59.7 million barrels/day by 2040. On the other hand it expects OPEC production to rise by 10 million barrels/day by 2040.

On the price front it now expects price to reach $70/barrel by 2020 and $95/barrel by 2040.

Oil is currently trading at $36.8/barrel.

Market Review December 23, 2015


The Asian session this morning was rather quiet with insignificant market movement and very few economic data. During the session, the United States Bureau of Economic Analysis released a report, which shows that consumer spending rose in November by 0.3%, that is in line with the expectations. The US Dollar seems to be paring back some of last week's gains against other major currencies such as the Euro and the Swiss Franc, which are the strongest major currencies for the month. For instance, EUR/USD remained near the 1.0930 area after reaching to the 1.0983 level yesterday, while the months’ highest was seen at the 1.1059 level until the moment.

Released during the early European session, French Consumer Spending declined -1.1% missing the estimated 0.2%.

The economic calendar is rather heavy today despite the fact that minor or perhaps muted reactions are expected in the market as the financial markets are in holiday mood.

The key events for the day would be the United Kingdom Current Account and Final GDP, the Canadian Core Retail Sales, GDP and Retail Sales and finally, the United States Core Durable Goods Orders, New Home Sales and Personal Income reports.

Additional economic releases would be the United Kingdom Index of Services, the United States Revised UoM Consumer Sentiment and the Canadian Retail Sales.


Data releases to monitor:
EUR: Italian Retail Sales.

GBP: Current Account, Final GDP, Index of Services, Revised Business Investment.

USD: Core Durable Goods Orders, Core PCE Price Index, Durable Goods Orders, Personal Income, New Home Sales, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations, Crude Oil Inventories.

CAD: Core Retail Sales, GDP, Retail Sales.

CHF: KOF Economic Barometer.


Trade Idea of the Day

EUR/JPY

Currently the pair is trading at 132.23. Traders must monitor the 133.78 resistance level and the support level 131.01 for possible breakouts. A possible scenario would be a movement towards the 131.67 support level, where a break may lead to the 131.25 area. An alternative scenario could be a movement towards the 132.72 resistance level, where a break may lead to the 133.20 area.

 

[VinsonFinancialsFX]

​

Financial News December 28, 2015


US household consumption likely to drive growth in 2016
University of Michigan index of consumer sentiment December final estimate was up to 92.6, slightly over expectations of 92.0.

Current conditions were up to 108.1, the highest since June. The consumer expectations were revised upwards a tick to 82.7, below November print but still over October.

Both were led by concerns related to personal finances, the current personal finances index climbed to 113 and expected personal finances went up to 124.

"Buying conditions for durables now stand at 167 (previous: 154), the highest since 2005 and consistent with continued strength in motor vehicle sales. Sentiment now stands in line with its average pace of improvement over the course of the recovery, and we expect household consumption will continue to drive growth in 2016", says Barclays in a research note.

Market Review December 28, 2015


The financial markets remain quiet with insignificant market movement as another holiday week begin. Released during the Asian session this morning, Japan's factory output fell for the first time in three months in November and retail sales slumped, suggesting that a clear recovery in the world's third-largest economy will be postponed until early in 2016. While manufacturers expect to increase output in coming months, the weak data casts doubt on the Bank of Japan's view that an expected pick-up in exports and consumption will help jump-start growth and accelerate inflation toward its 2% target. Industrial output fell 1.0% t in November from the previous month, more than a median market forecast for a 0.4 percent decline, data by the trade ministry showed on Monday. Moreover, retail sales fell 1.0% in November from a year earlier, more than a median forecast for a 0.1 percent drop. The USD/JPY pair remained near the 120.55 area, after dropping to the 120.15 area in the previous week.

The economic calendar is rather empty for the day and rather light for the whole week as the holiday spirit is dominating the markets. The key events for the week would be the United States CB Consumer Confidence and Unemployment Claims.

View our full economic calendar for a daily roundup of major economic events.

Data releases to monitor:
CAD: Bank Holiday (Boxing Day).

GBP: Bank Holiday (Boxing Day).


Trade Idea of the Day

EUR/CAD

Currently the pair is trading at 1.5182. Traders must monitor the 1.5318 resistance level and the support level 1.4955 for possible breakouts. A possible scenario would be a movement towards the 1.5241 resistance level, where a break may lead to the 1.5275 area. An alternative scenario could be a movement towards the 1.5137 support level, where a break may lead to the 1.5095 area.