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Daily economic digest from Forex.ee

15 December 2016, 12:15

EEAnalytics

Daily economic digest from Forex.ee

Stay informed of the key economic events

Thursday, December 15^th

And the decision is made. As it was widely expected yesterday the Fed increased its interest rate by 25 bps from previous 0.50% to current 0.75%, significantly boosting the US currency against its major peers. Moreover, the Fed in its statement, announced straight away after FOMC meeting, showed hawkish intentions of having 3 more interest rate hikes during 2017, up from 2 previously planned. Fed's Chairwoman J.Yellen during her interview also has provided the US dollar with some bullish impetus noting that interest rate raise should be perceived as confidence in the US economy. The US Dollar index that measures dollar’s positions against its main competitors rose up to 102.58 once again refreshing its 13-year highs.

The EUR/USD is extending its weakness this morning after crucial hawkish Fed’s decision. Yesterday the major currency pair fell for about 200 pips after it became known that the Fed had increased its interest rate by 25 bps. Currently the pair is trading at 1.0485 spot near its 21-month lows marked at 1.0469 level during Asian trading session. Today the euro will try to recover part of its position on better figures of the Euro area flash manufacturing PMI’s, while all attempts of recovery expectedly will be silenced as markets continue to digest the latest US events. Beside, today the BOE will announce its interest rate decision that also could bring some short-term trading opportunities on the pair.

The pound is consolidating its yesterday’s fall near mid-point of 1.25 level in the pair with US dollar anticipating for BOE monetary policy decision. Yesterday the GBP/USD pair followed global market’s sentiments and fell for two cents refreshing its two-week lows at 1.2513 handle as the Fed had increased its interest rate. Now all focus shifts on upcoming interest rate decision of the BOE, that expectedly will keep its rate unchanged however, BOE statement will be closely watched for any hints on further monetary policy outlook especially after positive UK macro data seen lately.

Seems that Swiss bulls have remained unimpressed by SNB Interest Rate Decision. The USD/CHF pair continues hovering above the level of 1.02 consolidating its yesterday’s gains showing no reaction on SNB Interest Rate Decision. As it was widely expected the SNB left its interest rate unchanged providing no impetus on the pair as traders continue to digest yesterday’s FOMC meeting results. Looking ahead, today the US data reports will be able to bring some impact on the pair, but for now the pair will continue to stay influenced by global market’s sentiments.

The main events of the day:

UK Retail Sales – 11.30 (GMT +2)

BOE Interest Rate Decision – 11.30 (GMT +2)

US Core CPI – 15.30 (GMT +2)

Philadelphia Fed Manufacturing Index – 15.30 (GMT +2)

BOC Governor S.Poloz’s speech – 18.15 (GMT +2)

Support and resistance levels for the major currency pairs:

EURUSD S. 1.0391 R. 1.0741

USDJPY S. 113.77 R. 119.01

GBPUSD S. 1.2407 R. 1.2797

USDCHF S. 1.0030 R. 1.0308

AUDUSD S. 0.7309 R. 0.7571