Daily Market Review — 17/12/2015
FOMC Meeting Results Will Continue to Influence Today’s Trading Dynamics
The FOMC announced the outcome of its two-day meeting yesterday, which had become the key event of the year. As predicted by most analysts, the US regulator raised the discount rate from 0.75% to 1.0%, while the range for the Fed funds rate was raised from 0.00–0.25% to 0.25–0.50%. The EUR/USD demonstrated sharp movements in both directions against this background. Such dynamics were also triggered by Fed Chief Janet Yellen’s press conference, which took place immediately after the announcement of the results. During her speech the Fed Chairwoman said that the decision to tighten monetary policy was justified because their two conditions were met. However, she noted that the pace of further increases will be moderate. Markets were expecting more “dovish” comments. US currency has been supported, which in the midterm will be in high demand. Today’s dynamics of the pair may be affected by data from the German IFO Institute IFO, which will be released at 09:00 (GMT). In addition the US Initial Jobless Claims report, as well as Philadelphia Fed Manufacturing Survey, will be published today at 13:30 (GMT).
Resistance: 1.0904, 1.0981, 1.1062
Support: 1.0833, 1.0764, 1.0690
The GBP/USD showed a negative trend during the first half of yesterday’s trading session, which was caused by mixed statistics from the UK. Thus, according to the data, the Unemployment Rate dropped to 5.2% versus the average forecast of 5.3%. However, the change in average earnings came out slightly worse than analysts’ average forecast, although it has shown steady growth. The Announcement of the results from the Fed meeting had particular influence on the pair, which, as widely expected, fully met the expectations of observers. The Fed Chairwoman’s comments in the following press conference were more balanced and rather more optimistic than most market participants had expected. The US dollar strengthened steadily against this background, and in the short term these dynamics will continue. The focus market participants today will be on the Retail Sales report in the UK, which will be published at 09:30 (GMT).
Resistance: 1.4992, 1.5097, 1.5183
Support: 1.4921, 1.4854, 1.4793
Main US Stock Indices showed strong growth yesterday, caused by the FOMC’s meeting results. As expected, the US regulator has taken the first step towards the normalization of monetary policy, while noting that the pace of further rate hikes will be gradual. The US Industrial Production Index has influenced markets as well, since it was slightly worse than the average forecast, and pointed out the downturn in the sector for the third month in a row, which was caused mainly by falling oil prices. Today’s dynamics of trading may be influenced by the publication of data on the US labor market, as well as data on the manufacturing activity by Philadelphia Fed, scheduled for 13:30 (GMT).
Resistance: 4674.11, 4703.73, 4729.23
Support: 4638.82, 4592.30, 4565.84
Light Sweet Crude Oil Futures
Quotes of “Black Gold” fell again yesterday, coming close to the psychological mark of $35 per barrel. This was caused by statistics on Crude Oil Stocks from the US Department of Energy, which showed that they rose last week to 4.8 million barrels against expectations of a decline of 1.4 million. The message that US Congress would agree to lift the ban on oil exports from the United States, allowing US oil companies to develop new markets has also influenced the market. Meanwhile, the FOMC decision to raise interest rates by 25 basis points had a major impact on the dynamics of yesterday’s trading. Such a move makes oil more expensive for non US dollar buyers, since oil prices are nominated in US dollars. Raising rates is likely to lead to an increase of US currency, which will negatively affect the oil quotes.
Resistance: 36.00, 36.64, 37.81
Support: 35.24, 34.50, 34.00