The FOMC cuts rates 25 basis points to 4.25% as expected. The accompanying statement has pointed to improved inflationary conditions however the housing market still weighing in on economic growth. Precious metals direction is undecided for now as the US dollar re-adjusts after the rate cut.
News and Events:
The news of the rate cut helped the US dollar gain against the Euro, but only temporarily, as the greenback gave back all of its gains early this morning. The accompanying statement has pointed to improved inflationary conditions however the housing market still weighing in on economic growth. Talk among traders signals falling confidence in Federal Reserve decisions as investors believe further rate cuts are in store.
Precious metals direction is undecided for now as the US dollar re-adjusts after the rate cut. Spot Gold and Silver have moved sideways for last three weeks but keeping in a bullish bias with the metals holding above $785 and $14.00 respectively. Expect range bound trading until the US dollar either breaks out or down.
Today’s Key Issues (time in GMT):
09:00 EUR Italian Labor Costs (QoQ) (3Q)
09:00 EUR Italian Labor Costs (YoY) (3Q)
09:30 GBP Claimant Count Rate (NOV) 2.6% vs. 2.6%
09:30 GBP Jobless Claims Change (NOV) -5.0K vs.-9.9K
09:30 GBP Average Earning inc. Bonus (3M/YoY) (OCT) 4.2% vs.4.1%
09:30 GBP Average Earning ex. Bonus (3M/YoY) (OCT) 3.7% vs.3.7%
09:30 GBP ILO Unemployment Rate (3Mths) (OCT) 5.4% vs.5.4%
09:30 GBP Manufacturing Unit Wage Cost (3Mths/YoY)
10:00 CHF ZEW Survey (Expectations) (DEC)
10:00 EUR Euro-Zone Employment (QoQ) (3Q)
10:00 EUR Euro-Zone Employment (YoY) (3Q)
10:00 EUR Euro-Zone Industrial Production s.a. (MoM) 0.2% vs. -0.7%
10:00 EUR Euro-Zone Industrial Production w.d.a. (YoY) 3.7% vs. 3.5%
12:00 USD MBA Mortgage Applications (DEC 7)
13:30 USD Trade Balance (OCT) -$57.4B vs. -$56.5B
13:30 USD Import Price Index (MoM) (NOV) 2.0% vs. 1.8%
13:30 USD Import Price Index (YoY) (NOV) 11.0% vs. 9.6%
13:30 CAD Int’l Merchandise Trade (OCT) C$2.2 vs. C$2.6
19:00 USD Monthly Budget Statement (NOV) -95.0B vs. -73.0B
21:45 NZD Retail Sales (MoM) (OCT) 0.0% vs. 1.0%
21:45 NZD Retail Sales Ex-Auto (MoM) (OCT) 0.0% vs. 0.5%
The Risk Today:
EurUsd is moving back up after hitting the lower trend line of it�s upward channel on December 6th. Although is has recently slipped from reaching the 50% retracement level of the recent down move, our target for now is 1.4770.
GbpUsd support holds strong at 2.0150 with a target and resistance at 2.0660. The current upward trend shows enough momentum for that move up.
UsdJpy is on a bounce after hitting a 12-year trend line support at 107.22. Should we break below this level again, this would be extremely bearish. Resistance at 112.20 and 114.75 holds firm.
UsdChf has crossed above it�s daily 22-day moving average and finding support above 1.1180. Two daily closes below this level would confirm continuation of the downward trend. On the upside, nothing lies in the way until 1.1630.
Resistance and Support:
By James Brandt - ACM Advanced Currency Markets, Geneva, Switzerland