U.S. Retail Sales And Fed Speak To Shape Expectations For A Rate Hike

U.S. Retail Sales And Fed Speak To Shape Expectations For A Rate Hike

12 September 2016, 12:42

Dear Traders,

We welcome you to a new trading week which could be quite interesting in terms of fresh economic data from the U.S. in the run-up to the Federal Reserve meeting on Sept 20-21. Chances of the Fed raising interest rates at the September meeting recently climbed to 38 percent and market participants will be looking for Fed officials to offer final hints before the pre-meeting blackout period. Today, Fed's Lael Brainard and Dennis Lockhart provide a last chance to monitor their remarks for clues about the likelihood of an increase later this month. Moreover, U.S. Retail Sales, scheduled for release on Thursday, will be the biggest report of the week and will shape the market's expectations for a Fed rate hike. On the same day, the Bank of England will decide on monetary policy but the central bank is expected to hold interest rates steady this month. Furthermore, we have Consumer Price reports from the U.K. and U.S. scheduled for release this week and any major surprises should have a significant impact on the currencies.


The euro formatted a slight downward trend within an overall sideways trend. Based on the recent downward channel we see a current resistance at around 1.13, whereas the 1.11-level could act as a support for the euro. Below 1.1050, however, we expect bearish momentum to accelerate.



The cable declined towards 1.3230 as the U.S. dollar gained some strength. The pair may head for a test of 1.32 before it is vulnerable to a correction. However, below 1.3160 we expect further losses towards 1.31. On the topside, we wait for a break above 1.3375 in order to reinforce a bullish stance.


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