We started London session today with employment datas from GBP, although largely positive but we did not see too much movement as the market was all gearing up for the FOMC.
In NY session we had PPI and retail sales data from USD, again the result was mostly in line, but again too much movement as everything is disregarded due to the FOMC.
Crude oil inventories was also draw today which helped the oil market and CAD.
Finally the FOMC came out and as expected, the rate was hiked.
Later on in Asia session we’ll have employment datas from AUD.
-For USD, not only was the rate hike as expected, the FED now forecast 3 hikes in 2017 instead of the originally 2. The forecast fed funds are 1.4% by the end of 2017 (original forecast was 1.1%), 2.1% in the end of 2018 (original forecast was 1.9%) and 3% in the end of 2019 (original was 2.9%)
PEC inflation forecast were still the same and GDP forecast was slightly higher.
Basically because of the newly elected president and the apparent economical boosting fiscal policy, the FED has now had more probability to tighten the interest to prevent overheating the market and over inflation.
This of course will continue to boost USD’s strength both fundamentally and sentimentally. We now have more certainty toward the future of USD in 2017 and the direction is still the same, to go up.
-For EUR, as a negative economic outlook and easing environment to continue overshadow this currency, the 2017 will be more uncertain as 2 major elections are coming. Now the USD has proven to be even stronger, we will see more money outflow from EURO as lack of confidence. EUR continues to be bearish.
-For GBP, the BOE meeting is tomorrow and although economically GBP has been doing well, but the Brexit still shadows the future of UK and we still have more short-sellers than buyers. It’s currency to buy against EUR, CHF & JPY and sell against USD, AUD, NZD & CAD. Nevertheless, it’s not a currency to hold long-term as the underlying unstableness is still there.
-For CAD, WTI had a large red candle today regardless of the crude oil inventories’ draw. The OPEC crude output actually hits record high in November. Basically the story is still the same, the oil is over-supplied by nature as the global economy slows down, the OPEC tries to artificially curb the output but the market doubts the ability and effect of it.
We think the future direction for oil is still up, but the path will be volatile with ups and downs. The strong USD also pressured oil down.
Finally, Canada needs to show some economic strength internally otherwise it’s not a currency to buy and only buy at the dips against EUR, CHF & JPY.
-For AUD & NZD, no major news but as mentioned, the strong dollar did pressure them a bit, but they’re still top 3 currencies to buy against other weak currencies.
-For JPY & CHF, they’re still the biggest losers and really don’t see any reason for them to rebound in 2017. Keep an eye on any policy changes.
Tomorrow we will have 2 central bank decisions from SNB and BOE, both are expect to be unchanged and non events.
Then in NY session we’ll have another USD datas to finish the week as Friday we only have Building permits from USD.
As mentioned, this is the last real trading week of 2016 and next 2 weeks will be thin liquidity.
All the major events are pretty much finished, and our view for the market has not changed but more confirmed as now the risk events are all finished.
USD continues to dominate the market and will most likely to do so in 2017.
AUD & NZD come in second as both are good currencies to buy against weaker ones.
GBP & CAD are both in neutral positions and most likely to trend with the sentiments.
EUR, CHF & JPY continues to be the losers with JPY & CHF have very little events to change the underlying weakness, and EUR will have more drama to make it go up and down with volatility in 2017.
We started London session today with employment datas from GBP, although largely positive but we did not see too much movement as the market was all gearing up for the FOMC.
In NY session we had PPI and retail sales data from USD, again the result was mostly in line, but again too much movement as everything is disregarded due to the FOMC.
Crude oil inventories was also draw today which helped the oil market and CAD.
Finally the FOMC came out and as expected, the rate was hiked.
Later on in Asia session we’ll have employment datas from AUD.
-For USD, not only was the rate hike as expected, the FED now forecast 3 hikes in 2017 instead of the originally 2. The forecast fed funds are 1.4% by the end of 2017 (original forecast was 1.1%), 2.1% in the end of 2018 (original forecast was 1.9%) and 3% in the end of 2019 (original was 2.9%)
PEC inflation forecast were still the same and GDP forecast was slightly higher.
Basically because of the newly elected president and the apparent economical boosting fiscal policy, the FED has now had more probability to tighten the interest to prevent overheating the market and over inflation.
This of course will continue to boost USD’s strength both fundamentally and sentimentally. We now have more certainty toward the future of USD in 2017 and the direction is still the same, to go up.
-For EUR, as a negative economic outlook and easing environment to continue overshadow this currency, the 2017 will be more uncertain as 2 major elections are coming. Now the USD has proven to be even stronger, we will see more money outflow from EURO as lack of confidence. EUR continues to be bearish.
-For GBP, the BOE meeting is tomorrow and although economically GBP has been doing well, but the Brexit still shadows the future of UK and we still have more short-sellers than buyers. It’s currency to buy against EUR, CHF & JPY and sell against USD, AUD, NZD & CAD. Nevertheless, it’s not a currency to hold long-term as the underlying unstableness is still there.
-For CAD, WTI had a large red candle today regardless of the crude oil inventories’ draw. The OPEC crude output actually hits record high in November. Basically the story is still the same, the oil is over-supplied by nature as the global economy slows down, the OPEC tries to artificially curb the output but the market doubts the ability and effect of it.
We think the future direction for oil is still up, but the path will be volatile with ups and downs. The strong USD also pressured oil down.
Finally, Canada needs to show some economic strength internally otherwise it’s not a currency to buy and only buy at the dips against EUR, CHF & JPY.
-For AUD & NZD, no major news but as mentioned, the strong dollar did pressure them a bit, but they’re still top 3 currencies to buy against other weak currencies.
-For JPY & CHF, they’re still the biggest losers and really don’t see any reason for them to rebound in 2017. Keep an eye on any policy changes.
Tomorrow we will have 2 central bank decisions from SNB and BOE, both are expect to be unchanged and non events.
Then in NY session we’ll have another USD datas to finish the week as Friday we only have Building permits from USD.
As mentioned, this is the last real trading week of 2016 and next 2 weeks will be thin liquidity.
All the major events are pretty much finished, and our view for the market has not changed but more confirmed as now the risk events are all finished.
USD continues to dominate the market and will most likely to do so in 2017.
AUD & NZD come in second as both are good currencies to buy against weaker ones.
GBP & CAD are both in neutral positions and most likely to trend with the sentiments.
EUR, CHF & JPY continues to be the losers with JPY & CHF have very little events to change the underlying weakness, and EUR will have more drama to make it go up and down with volatility in 2017.