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Wednesday, December 14th
The day of the most discussed event is here. Today the Fed will announce a decision regarding its further monetary policy. The market is widely expecting that the Fed will increase its interest rate by 25 bps, from current 0.50% to 0.75% as odds of today’s rate hike are close to 100%. Moreover, recent presidential elections with D.Trump’s promises of tax cuts and high investments in US infrastructure are also pushing FOMC members to make hawkish decision today. Furthermore, not only D.Trump’s talks are making Fed’s rate-hike possible, macroeconomic data seen over the last few months were highly supportive that also contributes to further monetary policy tightening. But for now, seems that the market is keeping silence ahead of crucial Fed’s decision that will be announced by the end of NA session.
The EUR/USD is building bullish momentum beyond 1.0650 level as investors are refraining from creating fresh long positions on USD ahead of the FOMC interest rate decision. Moreover, prevailing risk-off moods are also benefiting the euro. However, the current pair’s north directed trend won’t last long as widely expected Fed’s hawkish decision should stir up the USD bulls. As for data calendar, today European docket remains empty, while US will release PPI and Retail Sales that are scheduled on NA session.
Currently the pound is attempting to recover some pips against its American peer after yesterday’s sharp downside rally triggered by strong risk-off sentiments. At the moment the GBP/USD pair is trading around mid-point of 1.26 level showing lack of directions as market participants remain cautious anticipating for Fed’s monetary policy decision that expectedly will bring some volatile moves across the market. Looking ahead, today UK data from labor market, BoE Governor M.Carney’s speech and bloc of macro data from US side will also provide the pair with short-term impetus. Moreover, BoE will also announce its monetary policy decision that is scheduled on Thursday, but most likely BOE Interest Rate will remain unchanged.
The USD/JPY pair is losing some points as broadly weaker dollar’s positions and strong risk-off sentiments are supporting the yen despite mixed data from Japanese economy seen this morning. But in general, the pair remains little changed as traders have entered cautious mode ahead of one of the riskiest events of the month that will be announced by the end of NA session. But until than the market will be able to gain some impetus from US PPI and Retail Sales that also might provide trading opportunities in near-term perspective.
The main events of the day:
UK Average Earnings Index +Bonus – 11.30 (GMT +2)
UK Claimant Count Change – 11.30 (GMT +2)
BoE Governor M.Carney’s speech – 14.15 (GMT +2)
US Retail Sales – 15.30 (GMT +2)
US PPI – 15.30 (GMT +2)
US Crude Oil Inventories – 17.30 (GMT +2)
Fed’s Interest Rate Decision – 21.00 (GMT +2)
NZD GDP – 23.45 (GMT +2)
Support and resistance levels for the major currency pairs:
EURUSD S. 1.0568 R. 1.0696
USDJPY S. 114.36 R. 115.88
GBPUSD S. 1.2603 R. 1.2753
USDCHF S. 1.0076 R. 1.0166
AUDUSD S. 0.7451 R. 0.7547
NZDUSD S. 0.7152 R. 0.7256
USDCAD S. 1.3086 R. 1.3160
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