Yellen and Draghi - Decisions
Fasten your seat-belts for a huge week: ECB, NFP, Yellen and more
It’s hard to skip superlatives when describing the first week of the last month. Expectations are sky high for the ECB to act with vigilance to combat deflation. Will Draghi deliver or even over-deliver? This is the main event but it’s in close competition with Janet Yellen’s two appearances, the last ones before the potential rate hike later in the month. As always in the first week of the month we have the Non-Farm Payrolls, which also leads into that December decision by the Fed, and we have a full buildup. Elsewhere, Canada and Australia stand out with rate decision and other top tier events. Fasten your seat-belts.
Neither is going to do anything new
USD: Watch For These Hints In Yellen's Speech - Credit Agricole
Focus today will be on the first of the two Yellen speeches this week. The Fed chair will be talking at the Economic Club in Washington on the economic outlook. On Thursday, Yellen will be speaking on the US economy before the congressional Joint Economic committee. The speeches could attract considerable attention ahead of the December FOMC meeting.
With markets already pricing in a December lift-off, the two speeches will be scrutinized for evidence that the Fed will be very cautious hiking rates in coming months. Indeed, the spread between the Fed September dots and the rates implied by the Eurodollar contract strip has re-widened in recent weeks, hitting its widest level since September.
It seems that the rates markets are once again questioning the ability of the Fed to deliver aggressive tightening from here and this is in a stark contrast with the apparent resilience of USD of late. This makes the currency vulnerable to potential indications by the Fed Chair that the impact of strong USD on the economy is becoming a worry for the policy makers. Indeed, one of the reasons for the surge in the market USD-longs of late has been the lack of comments about USD from the Fed.
Gutteridge starts by commenting on the ECB rate decision and the further easing plan of the ECB. He believes that while cynics would argue a German hand curtailing the ECB from acting aggressively, the real reason remains the improving growth outlook in the Eurozone. With European growth moving towards the 2% trend, more aggressive stimulus by Draghi wouldn’t be appropriate.
ECB has very successfully made the peripheral banking lending rates relate with the core countries, says Gutteridge. He adds that through liquidity measures adopted by Draghi, the peripheral eurozone corporate can lend at more favourable rates, closer to the rates enjoyed by Germany. In an environment where labour is cheap, all of this bodes positive for Europe, believes Gutteridge.
Investment opportunity in peripheral eurozone economies?
Gutteridge notes that there remains opportunity to make money in eurozone peripheral banks. The ECB policy encourages lending, and consolidation ahead in the industry should drive earnings in the future.
Over-reaction to ECB
Gutteridge believes that we have seen an over-reaction the ECB decision, as the central bank had prepared everyone for quite a big policy move. But, the reaction by short-term traders have opened up opportunity for the long-term traders.
US jobs data ahead: Fed can’t be any more dovish
Speaking on the US jobs data ahead, Gutteridge believes that the event remains a little more significant than previous releases. With the fed rate hike coming, Gutteridge believes that the Fed can’t be more dovish than it has been in the past.
Even though the dollar is weak, Gutteridge remains on the pro-dollar wagon.Fed's Lockhart says the market is well prepared for rate lift off - Livesquawk Speaking on CNBC
- Watch the dots for where the Fed Funds Rate might go
Nothing more of note from Lockhart who is mostly banging the same old drum
Why one critic thinks the Fed 'did this to themselves' and will be forced to raise rates next week In just a few days, the Federal Open Market Committee will determine whether to raise interest rates for the first time since they were cut to 0% in 2008.
Most economists, analysts, and market players expect the long-awaited increase to happen.
Some say that the Fed has even waited too long to do it.
But Lindsey Piegza, the chief economist at Stifel, is not among those who believe the Fed has been too cautious.
Piegza long remained adamant that the Fed would focus on what she called "relative weakness of the economy" and not raise rates. As of Thursday, her official call according to Bloomberg's survey of economists was still for the Fed not to remain on hold, putting her in a tiny minority.
When reached by Business Insider on Friday, however, Piegza said that she had switched and believed the Fed would raise rates. This decision, however, would come as the central bank gave into outside pressure and would prove, ultimately, to be a huge mistake.
Why one critic thinks the Fed 'did this to themselves' and will be forced to raise rates next week In just a few days, the Federal Open Market Committee will determine whether to raise interest rates for the first time since they were cut to 0% in 2008.
Most economists, analysts, and market players expect the long-awaited increase to happen.
Some say that the Fed has even waited too long to do it.
But Lindsey Piegza, the chief economist at Stifel, is not among those who believe the Fed has been too cautious.
Piegza long remained adamant that the Fed would focus on what she called "relative weakness of the economy" and not raise rates. As of Thursday, her official call according to Bloomberg's survey of economists was still for the Fed not to remain on hold, putting her in a tiny minority.
When reached by Business Insider on Friday, however, Piegza said that she had switched and believed the Fed would raise rates. This decision, however, would come as the central bank gave into outside pressure and would prove, ultimately, to be a huge mistake.Their is a lot of Market Anticipation from the Fed about the hike of the interest rates as that will tell us the future course of action in the United States Dollar 
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