Daily Market Review — 16/12/2015
Main Event of the Day – FOMC’s Interest Rate Decision
The pair halted their decline yesterday, which we saw declining for two days in a row. This was caused by a release of positive statistics on inflation in the United States, which reached the level of expectation. The most important indicator, the Core Consumer Price Index, reached the Fed targeted level of 2.0%. Today, the USD/JPY will be affected by Japan’s Manufacturing PMI, which was published this morning and was slightly below forecasts. Meanwhile, the markets are waiting for the main event of the year, the announcement of the results of the US Federal Reserve’s two day meeting at 19:00 (GMT). It is widely expected that the US regulator will start tightening its monetary policy. For the most part, this event has already been taken into account and priced in, so market participants will closely follow the Fed Chairwoman Janet Yellen’s speech during her press conference, scheduled for 19:30 (GMT). Many observers expect that the accompanying statement will be “dovish” and trigger a sell-off of US currency. The second scenario assumes that the markets will become disappointed if the Fed leaves rates unchanged. In both cases, market participants are likely to be closing long positions on the US currency, which will lead to a short-term fall in its exchange rate.
Resistance: 122.29, 122.94, 123.47
Support: 121.57, 121.08, 120.33
The pair traded in different directions yesterday, caused by the publication of statistics on inflation in the United States. According to the data, core inflation came close to the target level of the US Federal Reserve, while headline inflation was significantly below its targets. Today, the NZD/USD will be affected by the announcement of the results of the FOMC meeting at 19:00 (GMT), which began yesterday. Investors expect sharp movements in different directions in all currency pairs without exception. Markets have already priced in the first rate hike, so if their expectations are not met, the US dollar will be put under heavy pressure. Meanwhile, the publication of New Zealand’s GDP in the third quarter, scheduled for 21:45 (GMT) may have some impact on the dynamics of the pair, although it will be limited.
Resistance: 0.6778, 0.6824, 0.6863
Support: 0.6738, 0.6687, 0.6604
Stock Exchanges in Europe showed strong growth yesterday, caused by a rise in price of shares of energy companies due to the recovery in oil prices. It is worth noting that investors are eagerly awaiting the outcome of the US Federal Reserve’s two-day meeting. The results will be announced today at 19:00 (GMT). US inflation, which was published yesterday, is in favor of a rate hike, since it was better than the average forecast of analysts. Recall that inflation and unemployment rates are very closely monitored by representatives of the US regulator. Nevertheless, yesterday’s positive data on UK inflation and economic activity in the Eurozone also supported the stock markets. Meanwhile, the focus of investors today will be on Janet Yellen’s press conference, scheduled for 19:30 (GMT). Market participants expect to find hints of further steps the US regulator will take in her speech.
Resistance: 10523.66, 10645.03, 10741.43
Support: 10265.59, 10119.97, 10021.28
Prices for the precious metal stabilized yesterday upon expectations of the announcement of the US Federal Reserve’s results of their two-day meeting. It is worth noting that gold prices have lost about 10% this year against the background of expectations of monetary tightening by the US Federal Reserve. Positive statistics on US inflation put some selling pressure on the market as well. Some analysts believe that gold prices could rise sharply after the announcement of the outcome of the meeting, since all investors’ attention will be focused on the timing of future rate increases. Nevertheless, most observers predict that gold prices may upgrade their multi-year lows at $1,000 per ounce and fall next year as the rise in US currency will weaken the demand for gold, which brings no interest income.
Resistance: 1067.44, 1074.64, 1085.16
Support: 1058.71, 1052.14, 1046.15