Daily Alert: Thursday 15th December 2016

Mark NugentDaily Alert, Dec 2016

Forex Analysis for Thursday 15th December 2016
Economic Calendar

UK Average Earnings beat expectations (2.5% vs 2.3%) and the prior figure revised upwards. In the US, both Core and Headline Retail Sales missed (Core: 0.2% vs 0.4% and Headline: 0.1% vs 0.3%). The Fed hiked the Fed Funds Rate by 25 basis points as expected. The vote was unanimous. They also predicted 3 more hikes in 2017 vs 2 previously. Credit Suisse economist stated RBA could have to reduce rates as many as 3 more times to battle against dramatic deleveraging amid overgeared conditions of Australian households. (Newswires)

Market Reaction

The USD surged, not on the rate hike but on the more aggressive tone for 2017. The Bloomberg index hit a new all time high. US Equities turned down as higher rates are bad for corporates. Oil dropped and the CAD dropped as there is now a rate differential between Canada and the US. The Japan 225 rose on a weakening JPY and the GBP continued to grind upwards.


The Fed’s dot plot
Fed impact in three charts
USD rally just getting started?
EU leaders hoping for respite in 2017 look away now


UK Retail Sales and Bank of England Super Thursday.

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