FED decision day!

The Fed is set to release its interest rate decision later on today. In particular, the majority of market participants are currently anticipating the bank to cut interest rates by 25 basis points, with FFF currently implying a 98.5% probability for such a scenario to materialize. As such our attention turns to the bank’s accompanying statement and of particular interest may be the comments in regards to the employment market should there be any. In particular, we would be looking for comments by policymakers in terms of whether or not they are concerned about a potential loosening of the labour market, which in turn may increase pressure for aggressive rate cuts by the Fed and thus may weigh on the greenback. On the flip side, should the Fed appear unfazed in regards to the recent employment metrics and calls for restraint emerge, it may be interpreted as relatively hawkish in nature which in turn may aid the dollar.In addition to the Fed’s interest rate decision, Fed Chair Powell’s conference will be closely watched due to the recent US Presidential Elections. President-elect Trump has publicly stated his dissatisfaction with the Fed’s monetary policy and in particular the leadership of Fed Chair Powell. As such, we would not be surprised to see reports fielding questions to the Fed Chair in regards to the recent events. Yet, what would be most interesting, is the possible questions in regards to the Fed’s future actions as a result of the incoming administration’s economic policies.

Over in Europe, Germany’s Chancellor Scholz has called for a no-confidence vote to the Bundestag on the 15 of January, after breaking up the “traffic light” coalition claiming that the Finance Minister Lindner of the FDP has broken his trust too many times. In our view, the Government will not survive the vote, and Germany will head to the polls in March. The latest development appears to be the CDU and the CSU which are the opposition parties, which have allegedly called for an earlier confidence vote which could be as soon as next week. In turn the political instability in Germany may weigh on the EUR.

GBP/USD appears to be moving in a sideways fashion. We opt for a sideways bias for the pair and supporting our case is the pair’s failure to break below the 1.2830 (S1) support level, in addition to the apparent smoothening of the Bollinger bands. Yet the RSI indicator below our chart currently registers a figure near 40, which tends to imply some bearish tendencies. Nonetheless, for our sideways bias to continue we would require the pair to remain confined between the 1.2830 (S1) support level and the 1.3040 (R1) resistance line. On the flip side, for a bearish outlook we would require a clear break below the 1.2830 (S1) support level with the next possible target for the bears being the 1.2690 (S2) support line. Lastly, for a bullish outlook we would require a clear break above the 1.3040 (R1) resistance line with the next possible target for the bulls being the 1.3180 (R2) resistance level.

WTICash appears to be moving in a sideways fashion, after failing to break above our 71.50 (R1) resistance line. We opt for a sideways bias for the commodity and supporting our case is the RSI indicator below our chart which currently registers a figure of 50, implying a neutral market sentiment. For our sideways bias to continue, we would require the commodity to remain confined between the 64.75 (S1) support level and the 71.50 (R1) resistance line. On the flip side for a bullish outlook we would require a clear break above the 71.50 (R1) resistance line with the next possible target for the bulls being the 78.00 (R2) resistance level. Lastly, for a bearish outlook, we would require a clear break below the 64.75 (S1) support level, with the next possible target for the bears being the 57.30 (S2) support line.

その他の注目材料

In today’s European session, we get Germany’s industrial production rate for September, followed by the UK’s Halifax house prices rate for October and the US weekly initial jobless claims figure. On a monetary level, we note Sweden’s, Norway’s the UK’s the Czech Republics and of course the event of the day which is the Fed’s interest rate decision which are all set to take place throughout the day.