Daily Market Analysis by Vinson Financials

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Financial News November 27, 2015


2016 global macro economic outlook

In 2015, global macro economic outlook was mostly dominated by the hike aniticipations from Fed and global growth. There were obstacles in US growth in the beginning of the year, in Q2 and early Q3 there was increase in Euro area's sovereign debt concerns, with August's Chinese currency volatiltiy.

The inflaxion point likely remains in place for the next year.

According to RBC Capital Markets,

Global growth and global headline inflation should stabilize and start picking up,
Fed hikes will highlight central bank policy divergence,
USD has room for further gains, even after the first Fed hike,
RMB is likely to weaken through the year
EM corporate debt/leverage will remain a concern.

Market Review November 27, 2015

The Asian session was busy with economic releases from Japan. More specifically, National CPI core stayed unchanged at -0.1%, while Tokyo CPI core improved more than expected to 0.0. Furthermore, household spending dropped sharply by -2.4% in October. Nonetheless, unemployment rate dropped to 3.1% in October, hitting the lowest level in 20 years. USD/JPY is currently trading near the 122.30 area with the next support seen at the 122.25 level.

Released from the United Kingdom during the session,. Gfk index of consumer confidence fell unexpectedly last month. In a report, GfK NOP said that U.K. Gfk Consumer confidence fell to a seasonally adjusted 1, from 2 in the preceding month.

Released during the early European session, German Import Prices declined -0.3% versus the estimated -0.1% while French Consumer Spending declined by -0.7% versus the estimated rise of 0.2%. Furthermore, Spanish Flash CPI declined by -0.3% versus the estimated -0.5%. EUR/USD rose slightly despite the negative economic data and currently is trading near the 1.0625 area.

The key events for the day would be the United Kingdom Second Estimate GDP, Prelim Business Investment and Index of Services.

Additional economic releases are the Italian 10-y Bond Auction, GfK German Consumer Climate and the Canadian Raw Materials Price Index (RMPI).


Data releases to monitor:

EUR: Italian 10-y Bond Auction, GfK German Consumer Climate.

GBP: Second Estimate GDP, Prelim Business Investment, Index of Services.

CAD: RMPI, IPPI.

Trade Idea of the Day

USD/CAD


Currently the pair is trading at 1.3319 Traders must monitor the 1.3435 resistance level and the support level 1.3246 for possible breakouts. A possible scenario would be a movement towards the 1.3340 resistance level, where a break may lead to the 1.3375 area. An alternative scenario could be a movement towards the 1.3291 support level, where a break may lead to the 1.3260 area.

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Financial News November 30, 2015


EUR/CHF likely moves upside ahead of ECB's December meeting

The KOF leading growth indicator in Switzerland, GDP and CPI inflation will slightly impact and the import data will only be of second importance despite expectations for a stabilization in inflation and growth.

The Swiss Franc will likely trade largely after the ECB meeting. Latest ECB meeting rhetoric has risen market expectations for additional stimulus from SNB, which causes CHF depreciation.

Swiss National Bank might not pre-empt the ECB, but however respond at its December meeting with its "nuclear" option, causing material CHF depreciation.

"We see EUR/CHF higher post the SNB meeting and expect the SNB to actively intervene post ECB should EURCHF depreciate. We remain long USDCHF spot and look for material further upside", says Barclays in a research note.

Market Review November 30, 2015


The Asian session was busy with economic releases from Japan and Australia. Released from Japan, Retail Sales rose 1.8% beating the estimated 0.9%, while Prelim Industrial Production rose 1.4% versus the estimated 1.9% and Housing Starts declined -2.5% versus the estimated rise of 2.5%. USD/JPY is currently trading near the 122.80 area with the next resistance seen at the 123.05 level. Released from Australia, MI Inflation Gauge showed a 0.1% rise versus the previous of 0.0%, Company Operating Profits rose 1.3% beating the estimated 1.1% and Private Sector Credit rose 0.7% versus the estimated 0.6%. AUD was strong in November as RBA maintained a neutral stage and supported by strong job data. However, the AUD is vulnerable to any weak Chinese data such as Chinese PMI data. AUD/USD is currently trading near the 0.7200 area with the next support seen at the 0.7158 level.

Released during the early European session, German Retail Sales dropped -0.4% missing the estimated 0.3%. The Euro remained weak thru the previous week and today, and seems that would continue heading south. The focus this week would be on the ECB Meeting on Thursday, where the European Central Bank is widely expected to announce additional easing measures. Some of these measures may include further reduction in the deposit rate and expansion of the asset purchase program. EUR/USD remained near the 1.0590 area with the next support seen at the 1.0565 level.

Elsewhere, KOF Economic Barometer came in at 97.9 versus the estimated 100.3. The USD/CHF pair currently trades at 1.0301, which was last seen in August 2010. Furthermore, Gold (XAU/USD) hit fresh five-year low by reaching to the 1052.63 level on Friday.

The key events for the day would be the United Kingdom Net Lending to Individuals, M4 Money Supply and Mortgage Approvals.

Additional economic releases are the United States Chicago PMI, Pending Home Sales and the Canadian Current Account.


Data releases to monitor:

EUR: Italian Prelim CPI.

GBP: Net Lending to Individuals, M4 Money Supply, Mortgage Approvals.

CAD: Current Account.

USD: Chicago PMI, Pending Home Sales.

NZD: Overseas Trade Index.

Trade Idea of the Day

NZD/USD


Currently the pair is trading at 0.6555. Traders must monitor the 0.6603 resistance level and the support level 0.6492 for possible breakouts. A possible scenario would be a movement towards the 0.6579 resistance level, where a break may lead to the 0.6600 area. An alternative scenario could be a movement towards the 0.6518 support level, where a break may lead to the 0.6500 area.

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Financial News December 2, 2015


NZD likely to weaken in near future
The New Zealand dollar is likely to be under pressure over the coming year. It is expected to fall to around 62c against the US dollar by June 2016, estimates Westpac.

This is because of following factors.
The RBNZ is expected to deliver another rate cut next week. The economy is expected to face low inflation rate in near future that will cause the Reserve Bank to cut interest rates next year. As a result, the NZ dollar will face downward pressure.

At the same time, the economy will face pressure due to change in global interest rates, especially US interest rates. The Fed is expected to hike interest rate in this month; thereby US dollar will be stronger against other currencies including the NZD.

"Overall we think NZ export commodity prices will remain under pressure over the next year or so. While dairy prices in particular are likely to rise in response to sharply lower NZ dairy production as the El Nino weather pattern weighs on pasture growth and milk supply, we think Chinese consumer demand could remain muted over the year ahead with the Chinese economy forecast to slow further in 2016", forecasts Westpac.


Market Review December 2, 2015


The Australian dollar rose sharply against the US Dollar during the Asian session as Australian GDP grew 0.9% beating the expectation of 0.7%.The positive data came due to a rebound in mining exports following a weather-related contraction in exports the previous quarter. This compared with analysts’ forecasts of a 0.8 per cent gain in gross domestic product in the third quarter and a revised figure of 0.3 per cent growth in the three months to end June. Moreover, Reserve Bank governor Glenn Stevens has described the 0.9 per cent rise in gross domestic product in the September quarter as "not a bad outcome" and added "Let's not overplay the significance but the economy is growing." Governor Stevens reiterated once again that the “outlook will continue its moderate growth." AUD/USD climbed to the 0.7340 area and currently is trading near the 0.7320 area.

Released during the early European session, Spanish Unemployment Change came in at -27.1K beating the estimated -10.3K and causing slight impact on the common currency. EUR/USD climbed to the 1.0625 area after dipping to the 1.0555 area as the week started.

Elsewhere, the International Monetary Fund has added the Chinese renminbi to the world’s basket of reserve currencies, an acknowledgment of China’s economic importance. In a statement, the IMF said that its executive board decided that starting October 1, 2016, the Chinese currency, which is more commonly known as the Yuan, will be freely usable, and join the U.S. dollar, the Euro, the Japanese yen, and the British pound in the basket of currencies that make up the Special Drawing Right.

The key events for the day would be the United Kingdom Construction PMI, the BOC Rate Statement and Overnight Rate, the United States ADP Non-Farm Employment Change and Fed Chair Yellen speech.


Data releases to monitor:

EUR: CPI Flash Estimate, Core CPI Flash Estimate, PPI.

GBP: Construction PMI.

CAD: BOC Rate Statement, Overnight Rate.

USD: FOMC Member Lockhart speech, ADP Non-Farm Employment Change, Fed Chair Yellen Speech, Revised Nonfarm Productivity, Revised Unit Labour Costs, Crude Oil Inventories, Beige Book, FOMC Member Williams speech.

Trade Idea of the Day

EUR/GBP


Currently the pair is trading at 0.7055. Traders must monitor the 0.7080 resistance level and the support level 0.7002 for possible breakouts. A possible scenario would be a movement towards the 0.7065 resistance level, where a break may lead to the 0.7100 area. An alternative scenario could be a movement towards the 0.7030 support level, where a break may lead to the 0.7005 area.

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Financial News December 3, 2015


ECB likely to cut deposit rate at todays meeting

The ECB has given a hint of adjusting its asset purchase program along three tools, such as time commitment, pace, and composition. A change in time and pace may be expected, but it is a less effective toll to influence exchange rate.

Since the euro area experiencing lower core inflation outlook, the ECB will choose a monetary tool that will help the Bank to correct the inflation outlook.

"The ECB could cut the deposit rate by 10bp and provide the market with forward guidance of further cuts. Another option would be to cut 20bp and signal its willingness to cut more if needed", argues Barclays.


Market Review December 3, 2015


The economic data from Australia was once again in focus during the Asian session. More specifically, Australia released its Trade Balance, which came in at -3.31B missing the estimated -2.61B, HIA New Home Sales declined -3.0% versus the previous of -4.0% and AIG Services Index came in at 48.2 versus the previous of 48.9. AUD/USD remained near the 0.7320 area with the next resistance seen at the 0.7342 level.

Released during the early European session, Spanish Services PMI came in at 56.7 beating the estimated 56.2 and causing insignificant impact on the EUR/USD, which returned to the 1.0570 area.

Elsewhere, Federal Reserve Chairwoman Janet Yellen indicated yesterday that she is ready to raise short-term interest rates this month barring a surprise that shakes her confidence in the economy. Moreover, she stated that she sees dissension within her ranks, which could complicate her moves toward ending seven years of near-zero rates. “I don’t need unanimity. I think we have to tolerate some dissent,” Ms. Yellen said in answer to a question after delivering a speech on the economic outlook. “I wouldn’t try to stifle dissents, and I would even expect some at critical junctures.” Furthermore, she anticipated "continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labour market slack and a rise in inflation to our 2 per cent objective."

In another place, the BoC stayed neutral as it left the overnight rate target unchanged at 0.5% the Bank Rate unchanged at 0.75% and the deposit rate at 0.25%. The Canadian dollar stayed in established range against the US Dollar. The pair is currently trading near the 1.3315 area with the next support seen at the 1.3280 level.

The key events for the day would be the ECB rate decision and press conference, where the Central Bank is expected to announce expansion of policy easing. Furthermore, there are also talks that ECB would further lower the deposit rate, which currently stands negative at -0.2%.

Additional economic releases would be the United States Unemployment Claims and Fed Chair Yellen testimony.


Data releases to monitor:

EUR: Italian Services PMI, French Final Services PMI, German Final Services PMI, Final Services PMI, Retail Sales, Spanish 10-y Bond Auction, French 10-y Bond Auction, Minimum Bid Rate, ECB Press Conference.

GBP: Services PMI.

USD: Unemployment Claims, Final Services PMI, Fed Chair Yellen Testimony, ISM Non-Manufacturing PMI, Factory Orders, Natural Gas Storage, FOMC Member Fischer speech.

Trade Idea of the Day

GBP/CAD


Currently the pair is trading at 1.9893. Traders must monitor the 1.9999 resistance level and the support level 1.9775 for possible breakouts. A possible scenario would be a movement towards the 1.9830 support area and further downward movement to 1.9775 level. An alternative scenario could be a movement near the 1.999 resistance level, where a break may lead to the 2.0075.

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Financial News December 4, 2015


ECB may hold current policy rates in near future

The ECB declared a deposit rate cut of 10 base points to -0.3% and kept all other rates unchanged. The Bank extended its asset purchase program for further 6 month and decided to reinvest the principal payments on the securities purchased under the program.

Analysts support the central bank's decision because weakening currency too much will have a negative impact on the economy.

"Today's deposit rate cut looks to have been the "final one" under the conventional policy pillar. We expect policy rates to remain at their current levels in the foreseeable future", says Rabobanks in a research note on Thursday.


Market Review December 4, 2015


The European Central Bank stepped up yesterday its efforts to boost the Eurozone’s weak economy but the size of the stimulus disappointed the markets, driving up the euro against the dollar to as high as 1.0980 level after dipping to the 1.0517 area earlier in the day. Moreover, ECB cut the deposit rate to a record low of -0.30% and vowed to print money for as long as it takes to defeat deflation, pushing its radical stimulus measures to extremes never seen before in any major region in modern history. In addition, Mario Draghi, the ECB’s president, said the bank will keep buying EUR 60bn of bonds each month as far out as March 2017 or “beyond if necessary”. It is effectively an open-ended pledge. “Abundant liquidity will continue for a long, long time,” he said. ECB actions came despite signs that economic growth in the Eurozone is picking up, and ignores intense protests from German-led hawks that quantitative easing at this late stage is doing more harm than good.

Elsewhere, Federal Reserve chair, Janet Yellen, has strongly indicated during her testimony to the Congress yesterday that Federal Reserve policymakers are likely to vote to raise US interest rates in two weeks, barring any major shocks to the global economy. Moreover, she noted that unemployment had lowered to 5%, economic growth was continuing well and she was confident that inflation would return to the Fed’s 2% target. “I currently judge that US economic growth is likely to be sufficient over the next year or two to result in further improvement in the labour market,” she said. “Ongoing gains in the labour market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2%.”

Released during the Asian session this morning, Australian Retail Sales rose 0.5% versus the estimated 0.4%, Japanese Average Cash Earnings rose 0.7% beating the estimated 0.7% and Consumer Confidence in Japan came in at 42.6 beating the estimated 41.8.

Released during the early European session, German Factory Orders rose 1.8% beating the estimated 1.3%, while Swiss Consumer Price Index (CPI) declined -0.1% versus the estimated 0.0%.

The key events for the day would be the United States Non-Farm payroll, Average Hourly Earnings and Unemployment Rate. The data will be critical, as it is the last bunch of important economic data before the Fed’s rate decision on December 16.


Data releases to monitor:

EUR: Retail PMI.

CAD: Employment Change, Trade Balance, Unemployment Rate, Labour Productivity, Ivey PMI.

USD: Average Hourly Earnings, Non-Farm Employment Change, Unemployment Rate, Trade Balance.
Trade Idea of the Day

USD/CAD


Currently the pair is trading at 1.3351. Traders must monitor the 1.3407 resistance level and the support level 1.3283 for possible breakouts. A possible scenario would be a movement towards the 1.3380 resistance level, where a break may lead to the 1.3405 area. An alternative scenario could be a movement towards the 1.3330 support level, where a break may lead to the 1.3300 area.

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Financial News December 7, 2015


Daily Economic Outlook: 7th December, 2015
The industrial production data in German for October is scheduled to release today. The reading will give an indication of the Q4 GDP outlook.

"Following two months of consecutive decline, we forecast an increase of 0.8% m/m in October.

A significant contribution to this pickup is expected to come from a rebound in manufacturing output", states Lloyds Bank.

Last week, the U.S. employment report for November posted better than expected result. The robust employment report along with FOMC members' recent statements supports the markets expectation of Fed's first rate hike after June 2006. As the markets are expecting Fed's rate hike decision next week, market is expected to be silent this week. St. Louis Fed President Bullard is expected to support a rate rise at the December meeting in his today's comment.

Market Review December 7, 2015


The United States unemployment rate remained unchanged at 5.0% and the economy created 211,000 jobs in November, a healthy result that further increases the likelihood of an interest rate hike by the Federal Reserve later this month. Moreover, in its November 2015 Employment Situation report, released last Friday, the Labour department revised its employment figures for September and October, saying 35,000 more jobs were created than initially estimated. Wages also grew for the month, though at a slower pace than in October. Average hourly earnings climbed 4 cents, equating to a 2.3% annualized gain. The focus of the month is turned now on the FOMC meeting next week with the markets pricing in a 79% chance of a hike.

Elsewhere, Oil price slides after OPEC failed to agree on production cuts. More specifically, the cost of a barrel of US crude oil has fallen by almost 1% to $39.61, below the $40 barrel mark. Furthermore, the Organization of the Petroleum Exporting Countries (OPEC) failed to agree on an oil production ceiling last Friday after a disagreement between Saudi Arabia and Iran meant that the group for the first time in decades did not even mention an output quota, which previously stood at 30 million barrels per day (bpd).

Released during the Asian session this morning, ANZ Job Advertisements rose 1.3% versus the previous of 0.3%, while Japans’ Leading Indicators rose 102.9% as widely expected.

Released during the early European session, German Industrial Production rose just 0.2% missing the estimated 0.8% and causing insignificant impact on the EUR/USD, which is currently trading near the 1.0845 area after reaching as high as the 1.0980 level during the last week. Released from Switzerland during the session, Foreign Currency Reserves came in at 563B compared to the previous of 551B.

The key events for the day would be the Eurogroup Meetings, BOE Governor Carney speech and BOJ Governor Kuroda Speech.

Additional economic releases would be the Sentix Investor Confidence, the United States Labour Market Conditions Index and Consumer Credit.

View our full economic calendar for a daily roundup of major economic events.


Data releases to monitor:
EUR: Sentix Investor Confidence, Eurogroup Meetings.

GBP: BOE Gov Carney speech.

USD: Labor Market Conditions Index, Consumer Credit.

JPY: BOJ Gov Kuroda speech.

NZD: Manufacturing Sales.

Trade Idea of the Day

GBP/AUD


Currently the pair is trading at 2.0595. Traders must monitor the 2.0955 resistance level and the support level 2.0340 for possible breakouts. A possible scenario would be a movement towards the 2.0720 resistance level, where a break may lead to the 2.0825 area. An alternative scenario could be a movement towards the 2.0485 support level, where a break may lead to the 2.0390 area.

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Financial News December 8, 2015


ECB may easy monetary policy further
Euro area is expected to post a sluggish growth rate in 2016. Rising non-performing loans, higher corporate and private debt, lack of significant economic reforms, and downward trend in housing prices in Italy and France hints weak economic momentum in the euro zone.

The economy is expected to grow at 1.3%, and core inflation rate would be at 1% in 2016, estimates Commerzbank.
Since weaker economic growth rate is foreseen in the euro area next year, the central bank may opt for further monetary easing.

"We envisage a further reduction of the deposit rate by 0.1 percentage points to -0.4%, possibly at the March meeting. In addition, the ECB could again push the earliest date for an end to asset purchases beyond the current date of March 2017", says Commerzbank in a research note.

Market Review December 8, 2015


The Asian session this morning was rather busy with economic releases from Japan, Australia and China. Released from Japan, Current Account came in at 1.49T versus the estimated 1.53T while Final GDP rose 0.3% beating the estimated 0.1%. Moreover, Bank Lending rose 2.3% compared to the previous of 2.5%, Final GDP Price Index rose 1.8% versus the estimated 2.0% and Economy Watchers Sentiment came in at 46.1 missing the estimated 4.6. USD/JPY is currently trading near the 123.10 area with the next resistance seen at the 123.65 level. Released from Australia, NAB business confidence rose to 5 in November compared to the previous of 3. The Chinese economic data was once again not so encouraging, as Trade Balance came in at 343B versus the estimated 395B and USD-Denominated Trade Balance came in at 54.1B versus the estimated 64.2B.

Elsewhere, Crude Oil plunged to new 6-year lows on Monday, the trading day after OPEC decided to lift their output target, which pushed the price of Oil below the August 24th low. WTI is staying soft below $38 for the moment as markets saw OPEC's move as effectively abandoning the strategy of limiting productions.

Released during the early European session French Gov Budget Balance came in at -76.2B while French Trade Balance came in at -4.6B versus the estimated -3.3B. EUR/USD is currently trading near the 1.0865 area with the next support seen at the 1.0796 level.

The key events for the day would be the United Kingdom Manufacturing Production and Industrial Production, the Canadian Building Permits and Housing Starts.

Additional economic releases would be the ECOFIN Meetings, NIESR GDP Estimate, JOLTS Job Openings and BOC Gov Poloz speech.

Data releases to monitor:
EUR: Revised GDP, ECOFIN Meetings.

GBP: Halifax HPI, Manufacturing Production, Industrial Production, 30-y Bond Auction, NIESR GDP Estimate.

USD: NFIB Small Business Index, JOLTS Job Openings, IBD/TIPP Economic Optimism.

CAD: Housing Starts, Building Permits, BOC Gov Poloz speech.


Trade Idea of the Day

NZD/JPY


Currently the pair is trading at 81.85. Traders must monitor the 83.35 resistance level and the support level 79.95 for possible breakouts. A possible scenario would be a movement towards the 81.25 support level, where a break may lead to the 80.70 area. An alternative scenario could be a movement towards the 82.05 resistance level, where a break may lead to the 82.65 area.

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Financial News December 9, 2015


Daily Economic Outlook: 9th December 2015

The Bank of England will draw domestic markets' attention as November Financial Policy Committee meeting of the Bank is scheduled today. The minutes of the meeting will provide the view of the Bank on risks to the UK's financial system amid slowdown in emerging markets and current account deficit of the economy, which remains close to a record high.

In euro area, German's trade balance data for October are scheduled to release. The figures will be watched closely as they will indicate the growth outlook of the economy in Q4.

"Today's speeches by the ECB Council members Lautenschlaeger, Nowotny and Hansson may shed some light on last week's surprisingly tepid ECB policy loosening, while the RBNZ are expected to trim the cash rate by 25bp to 2.5% later tonight", says Lloyds Bank.
Market Review December 9, 2015


Consumer confidence has slipped after two cheerful months, according to the latest Westpac Melbourne Institute sentiment index, as the cooling housing market, talk of a rise in the GST (Goods and Services Tax) and worries about family finances began to display their impact. Westpac Consumer Sentiment index declined -0.8% this month, from 101.7 points in November to 100.8 points, seasonally adjusted. Released also from Australia during the Asian session, Home Loans eased 0.5% versus the estimated -1.0%. AUD/USD is currently trading near the 0.7225 area with the next support seen at the 0.7185 level.

Released from Japan during the Asian session this morning, Core Machinery Orders unexpectedly rose 10.7% in October, posting a second straight month of gains, in a sign of a delayed pickup in business investment. Moreover, Prelim Machine Tool Orders declined -17.9% compared to the previous of -22.9% and BOJ M2 Money Stock rose 3.3% missing the estimated 3.5%. The Japanese Yen seems to be gaining against the US Dollar as the USD/JPY pair fell to the 122.70 area.

Elsewhere, Switzerland's unemployment rate held steady for yet another month in November. More specifically, Unemployment Rate rose 3.4% as widely expected and in line with the previous data. Released from Germany during the early European session, Trade Balance came in at 20.8B beating the estimated 19.2B. EUR/USD rose to the 1.0915 area after breaking the 1.0900 level.

The key events for the day would be the RBNZ Rate Statement, Official Cash Rate and Press Conference.

Additional economic releases would be the FPC Meeting Minutes and Crude Oil Inventories.

Data releases to monitor:

GBP: FPC Meeting Minutes.

USD: Wholesale Inventories, Crude Oil Inventories, 10-y Bond Auction.

NZD: Official Cash Rate, RBNZ Rate Statement, RBNZ Monetary Policy Statement, RBNZ Press Conference.


Trade Idea of the Day

GBP/USD


Currently the pair is trading at 1.5037. Traders must monitor the 1.5158 resistance level and the support level 1.4894 for possible breakouts. A possible scenario would be a movement towards the 1.5100 resistance level, where a break may lead to the 1.5135 area. An alternative scenario could be a movement towards the 1.4995 support level, where a break may lead to the 1.4950 area.

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Financial News December 11, 2015


Checking on FED rate hike probabilities
US Federal Reserve will be meeting on December 15th-16th, to decide on whether to hike rates or not. Market pricing of rate hike has somewhat softened after reaching as high as 84%.

However hike expectations over next year for subsequent have firmed somewhat.
Let's look at the market pricing of hikes over next few meetings.

Current FED interest rate is at 0 - 0.25%.

December, 2015 meeting - Market is attaching 28% probability that rates will remain 0 - 0.25% and 72% probability that rates will move to 0.25-0.5%.
January, 2016 meeting - Market is attaching 23% probability that rates will remain 0 - 0.25% , 65% probability that rates will move to 0.25-0.5% and 12% probability that rates will be at 0.5-0.75%.
March, 2016 meeting - Market is attaching 11% probability that rates will remain 0 - 0.25% , 38% probability that rates will move to 0.25-0.5%, 39% probability that rates will be at 0.5-0.75% and 6% probability that rates will be at 0.75-1%
April, 2016 meeting - Market is attaching 9% probability that rates will remain 0 - 0.25% , 38% probability that rates will move to 0.25-0.5%, 40% probability that rates will be at 0.5-0.75%, 12% probability that rates will be at 0.75-1% and 1% probability that rates will be at 1-1.25%.
June, 2016 meeting - Market is attaching 6% probability that rates will remain 0 - 0.25% , 28% probability that rates will move to 0.25-0.5%, 39% probability that rates will be at 0.5-0.75%, 21% probability that rates will be at 0.75-1% and 5% probability that rates will be at 1-1.25%.


Market Review December 11, 2015


Asian session pasted without any major events and unexpected moves after yesterday central banks day both BOE and SNB behave as forecasted and kept the rates unchanged. Oppose to Fed and ECB monetary policy the BOE showed more calm regarding any changes in monetary policy and reiterated yesterday that it remains in no rush to change interest rates. Furthermore, the UK policymakers said they would not match an expected rate hike by the FED next week, stressing there was “no mechanical link” with its thinking. GBP after the BOE comments weakened against the USD however, analysts commented that GBPUSD pair still looks bullish in the medium term.

SNB also kept the rate unchanged and the official report states that the target range for the three-month Libor remains between –1.25% and –0.25%, and the interest rate on sight deposits with the SNB is unchanged at –0.75%. The negative interest rate and the interest rate differential with other currencies make the Swiss franc less attractive, and continue to help weaken it however analysts say that the CHF is still significantly overvalued. Moreover, the SNB will remain active in the foreign exchange market in order to influence the exchange rate situation, as necessary.

Looking ahead the US Retails Sales will be the highlight of the day where is forecasted to be at 0.2%. Furthermore ECB Targeted LTROmay move the market. In economic releases so far we had the German CPI final at 0.15. From China M2 Money Supply y/y at 13.7% and New Loans at 709 billion.


Data releases to monitor:

GBP: Construction Output m/m, Consumer Inflation Expectations, MPC Member Weale Speaks

EUR: Targeted LTRO, Italian Quarterly Unemployment Rate

USD: Core Retail Sales m/m, Retail Sales m/m, PPI m/m, Core PPI m/m

Trade Idea of the Day

EUR/USD


Currently the pair is trading at 1.0965. Traders must monitor the 1.1096 resistance level and the support level 1.0795 for possible breakouts. A possible scenario would be a movement towards the 1.0940 support level, where a break may lead to 1.0910 level and possible to 1.0860. An alternative scenario could be a movement towards the 1.0980 resistance level, where a break may lead to the 1.1030.

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Financial News December 14, 2015


EUR/USD likely to be at 0.95 by end-2016
European Central bank's rhetoric might at the December meeting might come at a long-term cost to EUR , while EUR/USD was forecasted higher last week.

"We continue to forecast EUR/USD at 0.95 by end-2016", says Barclays in a research note.

The year 2016 looks prepared for higher volatility in EUR/USD. While the Greek crisis has abated, there is a new escalation of tensions around most of highly-indebted EA countries are still a key risk as there is mounting up opposition to rising immigration and fiscal austerity.

After the ECB meeting, the longer term inflation expectations in the market also dropped, with most recent flash estimate of HICP inflation disappointing significantly, which should be confirmed at 0.9% yoy, while previously it was at 1.1% yoy.

Currently EUR is trading at 1.0965 against US dollar.

Market Review December 14, 2015


The Asian session this morning was rather quiet despite the long awaited anticipated event from the FOMC on Wednesday. Released during the session, Japan's December tankan survey showed big manufacturers index +12 beating the estimated +11, while Tankan Non-Manufacturing Index came in at +25 beating the estimated +23. Moreover, Japanese Revised Industrial Production rose 1.4%, as expected by economists and Tertiary Industry Activity rose 0.9% versus the estimated 0.5%. USD/JPY is currently trading near the 121.30 area with the next support seen at the 120.56 level.

The United States Federal Reserve is expected to start raising interest rates on Wednesday, in the first such move since 2006. The anticipated economic move has been described as “momentous” and a hugely significant milestone of progress in the repairing of the US economy since the damage done by the Great Recession. Furthermore, Janet Yellen, the Fed’s chair, had signalled that the central bank could raise interest rates from their record low of 0.25% in September, however the downturn in the Chinese economy and the resulting turmoil in financial markets, persuaded the Fed to change their mind and keep the current interest rates. The FOMC are due to hold their December policy meeting on Tuesday and Wednesday this week, the scene has been carefully set for the first increase in US interest rates for almost a decade.

Elsewhere, late on Friday, the China Foreign Exchange Trade System (CFETS), a sub-institutional organization of the People's Bank of China (PBOC), introduced a new exchange rate index that will see the Yuan (CNY), or renminbi, valued against a basket of 13 trade-weighted currencies. Furthermore, it is not clear if the PBOC will ever formally tie the Yuan to this gauge but CFETS did say the basket includes both G3 and Asian currencies. The Chinese government believes that "the bilateral renminbi-USD exchange rate is not considered a good indicator of the international parity of tradable goods". Introduction of the index would help gauge renminbi’s performance against a basket of trade-weighted currencies as "a basket of currencies can better capture the competitiveness of a country's goods and services, and better enable the exchange rate to adjust".

The key events for the day would be the Eurostat Industrial Production, ECB President Draghi speech and MPC Member Shafik speech.


Data releases to monitor:

GBP: MPC Member Shafik speech.

EUR: Industrial Production, ECB President Draghi speech.

Trade Idea of the Day

EUR/GBP


Currently the pair is trading at 0.7229. Traders must monitor the 0.7279 resistance level and the support level 0.7163 for possible breakouts. A possible scenario would be a movement towards the 0.7254 resistance level, where a break may lead to the 0.7275 area. An alternative scenario could be a movement towards the 0.7207 support level, where a break may lead to the 0.7175 area.

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VinsonFinancialsFX

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Financial News December 15, 2015


Fed's second rate hike likely in April, 2016

The FOMC meeting on policy decission is scheduled tomorrow. The Fed is expected to hike rate for first time after almost 10 years. Looking forward, analysts foresee a series of rate hikes next two years.

Some economic indicators hint the economy will rebound in Q4. Moreover, WTI crude oil is currently trading 10 dollars below FOMC target at USD36 per barrel.Further fall in oil prices will mire the EMs in crisis as corporate debt and bankrupties in the commodity sector. The FOMC is expected to take a cautious monetary majors.

"We expect the second and third hikes to take place in April and September next year, respectively (every third meeting). The fourth hike is likely to come in December. In 2017, we expect a hike every other meeting (March, June, September and December)", argues Danske Bank.

Market Review December 15, 2015


The Reserve Bank of Australia released during the Asian session this morning its December meeting minutes. In the text, the central bank suggested that the central bank is in no hurry to cut interest rates. Furthermore, RBA said that recent flow of domestic data had generally been positive. In addition, output growth is expected to strengthen gradually over the next two years. Core inflation rates remained stable, but generally below the central bank’s target. The RBA said that the Australian Dollar is adjusting to significant declines in key commodity prices and boosting demand for domestic production. The central bank reiterated that the outlook for inflation might afford "some scope for a further easing of monetary policy". Moreover, the board will continue to assess the outlook and judge whether or not the current state of monetary policy is most effective for sustaining growth. Overall, the meeting minutes likely further weighed on RBA rate cut bets. The document appeared to justify the central bank’s relatively neutral monetary policy tone. Released also from Australia during the session, House Price Index (HPI) rose 2.0% versus the estimated 2.1% while New Motor Vehicle Sales rose 1.0% compared to the previous -3.7% decline. AUD/USD rose slightly, reaching as high as the 0.7283 level and currently is trading near the 0.7245 area.

Released during the early European session, Switzerland’s Producer Price Index (PPI) rose 0.4% beating the estimated 0.1%.

The economic calendar for the day is rather busy with economic releases from the United Kingdom the United States, New Zealand, Canada and the Eurozone. The key events would be the United Kingdom inflation data, German ZEW Economic Sentiment, Canadian Manufacturing Sales, New Zealand’s GDT Price Index and the United States CPI and Core CPI.


Data releases to monitor:
GBP: CPI, MPC Member Haldane speech, PPI Input, RPI, Core CPI, HPI, PPI Output, BOE Quarterly Bulletin, CB Leading Index.

EUR: German ZEW Economic Sentiment, ZEW Economic Sentiment, Employment Change.

CAD: Manufacturing Sales, BOC Gov Poloz speech.

USD: CPI, Core CPI, Empire State Manufacturing Index, NAHB Housing Market Index, TIC Long-Term Purchases.

NZD: GDT Price Index, Current Account.

Trade Idea of the Day

GBP/AUD


Currently the pair is trading at 2.0903. Traders must monitor the 2.1213 resistance level and the support level 2.0554 for possible breakouts. A possible scenario would be a movement towards the 2.0805 support level, where a break may lead to the 2.0690 area. An alternative scenario could be a movement towards the 2.0962 resistance level, where a break may lead to the 2.1072 area.

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VinsonFinancialsFX

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Financial News December 16, 2015


Unemployment report to set mood for Pound heading into FOMC

Since Bank of England (BOE) published its inflation report, suggesting no hike required from BOE in 2016, to keep inflation in check, pound has been struggling. After last week's dovish monetary policy statement, it's even struggling to clear 1.52 resistance area.

Last night, stronger Dollar ahead of FOMC, just pushed pound few pips away from 1.5 support area.

ILO unemployment reading to publish around 9:30 GMT today.

- As of now unemployment rate in UK stands at 5.3% and median estimate says it will remain so in today's reading.

- Once again major focus will be on earnings growth,since BOE policymakers in several instances announced they will be looking at wage growth component and current rate is not sufficient to generate targeted inflation. This component has gained sharply since last year, however slowed down somewhat in recent reading. In three months to September, average earnings excluding bonus rose by 2.5%, lower than 2.9% seen in July.

- Today market is expecting slowdown further in earnings growth at 2.3% excluding bonus but to grow 2.5% including it.

Impact -

- Data, coming as expected, may not be very bullish for Pound as Bank of England (BOE) mentioned that current wage growth is not sufficient to give a rise in inflation.

- However any wage growth below 2.3% likely to sour sentiment.

- With better report, expect Pound to have better sentiment heading into FOMC.

Market Review December 16, 2015


Janet Yellen, the chair of the Federal Reserve, has clearly signalled that the United States central bank is preparing to “normalise” policy, at its final meeting before the end of the year. Furthermore, the latest inflation data, published on Tuesday, which was in line with expectations at 0%, seems that has removed any final obstacles to a hike. Currently, the market has almost fully priced in a Fed funds rate hike of 25 Bps. Anything other than this should be a huge surprise and will possibly trigger great volatility in the financial markets. Moreover, if the FOMC don’t take action at a time when there is almost universal market expectation for a rate hike, Federal Reserve credibility will likely have never sunk to a lower level. In addition, if Janet Yellen and her colleagues highlight the remaining threats on the US economy, the rate hike will be viewed as a “dovish hike”, suggesting policymakers are more worried about growth than inflation, and reassuring markets that have become dependent on central bank support. The dollar came off a near one-week high versus the other major currencies today, but its losses were limited as the market counted down the hours to a likely hike in U.S. interest rates.

Released during the Asian session, MI Leading Index declined -0.2% compared to the previous rise of 0.1%, while Japan’s Flash Manufacturing PMI came in at 52.5 versus the previous of 52.6. USD/JPY rose to the 121.90 area after dipping to the 120.35 area yesterday.

Released during the early European session, French Flash Manufacturing PMI came in at 51.6 beating the estimated 50.6 and French Flash Services PMI came in at 50.0 versus the estimated 50.7. In addition, German Flash Manufacturing PMI came in at 53.0 versus the expectations of 52, while German Flash Services PMI came in at 55.4 versus the estimated 55.5. EUR/USD is currently trading near the 1.0935 area with the next support seen at the 1.0904 level.

The key events for the day would be the Federal Funds Rate decision, the FOMC Statement and Press Conference.

Additional economic releases would be the United Kingdom Average Earnings Index, Claimant Count Change and Unemployment Rate. New Zealand GDP and the Eurozone inflation report.

View our full economic calendar for a daily roundup of major economic events.


Data releases to monitor:
GBP: Average Earnings Index, Claimant Count Change, Unemployment Rate.

EUR: Flash Manufacturing PMI, Flash Services PMI, Final CPI, Final Core CPI, Trade Balance.

CAD: Foreign Securities Purchases.

USD: Federal Funds Rate, FOMC Press Conference, FOMC Statement, FOMC Economic Projections, FOMC Press Conference, Crude Oil Inventories, Flash Manufacturing PMI, Industrial Production, Capacity Utilization Rate, Housing Starts, Building Permits.

NZD: GDP.

CHF: SNB Quarterly Bulletin, ZEW Economic Expectations.

Trade Idea of the Day

EUR/JPY


Currently the pair is trading at 133.31. Traders must monitor the 134.21 resistance level and the support level 132.43 for possible breakouts. A possible scenario would be a movement towards the 133.53 resistance level, where a break may lead to the 133.90 area. An alternative scenario could be a movement towards the 132.85 support level, where a break may lead to the 132.55 area.

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VinsonFinancialsFX

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Financial News December 17, 2015


Four rate hikes by Fed likely next year

After almost a decade the Fed initiated its monetary tightening policy with 25 base point rate hikes yesterday. The labor market showed a sign of improvement and economic growth rate on track.

The unemployment rate started falling; experts believe that the unemployment rate will be below target level during 2016 - 18.
With the expansion of labor market and stronger US dollar, the inflation rate is expected to increase further. The annual core CPI inflation was recorded at 2.0% year on year in November.

"We anticipate that the Committee will increase the Fed Funds Rate four times in 2016 and another four times in 2017. Key to this view will be continued momentum in the labour market and a firming in global growth; both are necessary to mitigate downside risks to the outlook" says Westpac in a research note.

Fed rate hike a temporary gain for Asia local markets
After almost a decade, the Fed initiated its monetary tightening policy with a 25 base point rate hike yesterday, as expected. The Fed Chair Yellen indicated that the central bank is on the path of policy tightening, and it will increase its policy rate gradually.

The FX, equity, and bond markets started reacting to the rate hike. The EM local currency and bond markets are positively reacted to the rate hike, and similar reaction is foreseen in EM Asia in the near future.

"The improvement in risk appetite following the Fed hike also helped EM currencies to absorb the hike easily. In the near term as trading winds down for the year and flows thin, there may be further respite for EM Asia currencies, but we do not expect this to persist into 2016", states Barclays in a research note to its client.

Market Review December 17, 2015


The Federal Reserve voted unanimously yesterday to raise interest rates by a quarter point (25Bps), marking the first increase in more than nine years. The bank raised its fed funds rate to a range of 0.25% to 0.50%, ending an unprecedented seven-year run of near-zero interest rates. The vote was 10-0. The board of directors also raised the discount rate to 1% from 0.75%. Moreover, the Fed said it will "carefully monitor" actual inflation in light of 'current shortfall." Furthermore, the FOMC stated in its statement "Given the economic outlook, and recognizing the time it takes for policy actions to affect future economic outcomes, the Committee decided to raise the target range for the federal funds rate." In addition, the Federal Open Market Committee said that interest rates are only likely to increase in a "gradual" manner, ending up at a long-run target of 3.5%.

At a press conference following the announcement of the rate hike, Janet Yellen said that people should know that the Fed’s decision “reflects our confidence in the economy.” While economic conditions vary across regions and across industries, “we see an economy that is on a path of sustainable improvement,” Yellen went on. “I hope they take it as a signal that conditions will continue to strengthen, and jobs prospects will be good.” While she pointed out that the Fed will not rush into further hikes, and that it would monitor closely what was happening to the inflation rate. Moreover, Fed Chair Yellen dismissed concerns about the economy slipping back into recession. “I feel confident about the fundamentals driving the economy,” she said. She pointed to a healthy employment picture by mentioning that 2.3 million new jobs were created this year and strong growth in household demand, particularly for new cars and trucks. There is always the possibility that a negative shock will hit the economy, Yellen conceded, but she said that she did not see anything to be overly concerned about at the moment. After the Fed decision, US stocks surged sharply, with the DJIA rising 224 pts to close at 17749 and the S&P 500 rising to the 2077 level. On the other hand, EUR/USD spiked up to the 1.1010 area before dropping to the 0.0830 area.

Elsewhere, the Hong Kong Monetary Authority raised its base rate for the first time in nine years, following the U.S. Federal Reserve’s lead overnight, and flagged the risk of rising capital outflows from the city. The key rate was raised to 0.75% from 0.50% the Hong Kong Monetary Authority said as Hong Kong’s currency is pegged to the U.S. dollar, which typically means that Hong Kong’s monetary policy moves in line with the Fed.

Released during the Asian session today, Japan’s Trade Balance came in at 0.00T versus thee estimated -0.21T causing insignificant impact on the USD/JPY, which is currently trading near the 122.40 area.

The key events for the day would be the German Ifo Business Climate, ECB Economic Bulletin, the United Kingdom Retail Sales and the United States Unemployment Claims and Philly Fed Manufacturing Index.


Data releases to monitor:
GBP: Retail Sales, CBI Industrial Order Expectations.

EUR: German Ifo Business Climate, ECB Economic Bulletin, Italian Trade Balance.

USD: Philly Fed Manufacturing Index, Unemployment Claims, Current Account, CB Leading Index, Natural Gas Storage.

Trade Idea of the Day

EUR/AUD


Currently the pair is trading at 1.5098. Traders must monitor the 1.5340 resistance level and the support level 1.4950 for possible breakouts. A possible scenario would be a movement towards the 1.5042 support level, where a break may lead to the 1.4990 area. An alternative scenario could be a movement towards the 1.5146 resistance level, where a break may lead to the 1.5210 area.

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VinsonFinancialsFX

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Financial News December 18, 2015


Daily Economic Outlook: 18th December 2015

The market experts are still busy in assessing impact of the Fed's first rate hike in almost 10 years. Therefore, other indicators may not get much importance from market.

In the United States, US Markit services PMI survey for December and Kansas City Fed manufacturing survey for December are due today.

Richmond Fed President Lacker expected to speak on the 2016 economic outlook at the Charlotte Chamber of Commerce will be watched closely.
In euro area, no major indicators are scheduled to release today except November inflation and current account figure for October.

Market Review December 18, 2015


The Bank of Japan surprised the markets today by voting 6-3 to increase purchases of exchange-traded funds (ETFs) and lengthening the maturity of bonds it purchases to encourage investment in the economy. The BOJ announced that under the new program, it will purchase ETFs at an annual pace of 300 billion yen composed of stocks issued by firms "proactively" investing in physical and human capital. The plan will start with purchases of ETFs tracking the JPX-Nikkei Index 400, which screens for factors including corporate governance and investor-focused management. The new ETF purchase program will begin in April 2016 and is in addition to the current ETF purchase program of around 3 trillion yen annually. Moreover, the BOJ held rates steady and said it will stick to its plan to increase the monetary base by 80 trillion yen a year, as expected. USD/JPY spiked up to the 123.57 level before dropping to the 121.80 area, where is currently trading.

Elsewhere, Business confidence in New Zealand has improved to its highest level in eight months, according to ANZ Bank's latest business sentiment survey. More specifically, a net 23 percent of respondents in December expected the economy to improve over the coming year, compared with 14.6 percent the month before. Companies were also more upbeat about their own business outlook, with a net 34.4 percent expecting an improvement in their activity over the coming year, from 32 percent in November.

The economic calendar for the day would be rather empty with the key events to be the Canadian Consumer Price Index, Core CPI and the United States Flash Services PMI.


Data releases to monitor:
CAD: Core CPI, CPI, Wholesale Sales.

EUR: Current Account.

USD: Flash Services PMI, FOMC Member Lacker speech.

Trade Idea of the Day

GBP/AUD


Currently the pair is trading at 2.0859. Traders must monitor the 2.1213 resistance level and the support level 2.0673 for possible breakouts. A possible scenario would be a movement towards the 2.0943 resistance level, where a break may lead to the 2.1037 area. An alternative scenario could be a movement towards the 2.0802 support level, where a break may lead to the 2.0725 area.

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VinsonFinancialsFX

Member
93 0


Financial News December 21, 2015


FxWirePro: GBP/USD outlook focus for 2016

Pound is declining steadily against Dollar before and also after rate hike from US Federal Reserve of 25 basis points. Before Bank of England (BOE) published its weaker inflation outlook and started producing dovish monetary policy statement, Pound was expected to be the key contender to take the baton from Dollar, while BOE takes it from FED.

Now the popular expectations have shifted and economist are now expecting another few firings from FED, before BOE finally takes over.

Focus will be on inflation statistics as well as wage growth for this year. So far there is only one hawk in BOE board, Ian McCafferty, which we expect to grow by another two till September. Unless situation worsens over China, BOE could be very close to a hike by end of year, which could come into focus post June.

Trade idea -

We have long remained focused to the downside for the pair. Our call to sell GBP/USD @1.52 and 1.54 still active, with stop loss around 1.58 and targeting 1.425 area. Interim targets are 1.49 and 1.475. First one is reached.

In this post, we would like to add another interim target of 1.45-1.445 area.

Market Review December 21, 2015


The Financial markets seem to be getting into the holiday spirit, as no significant market movement was noticed despite Federal Reserve decision last week to lift the interest rates.

Elsewhere, anti-austerity party Podemos and liberal Ciudadanos made big gains as the conservative Popular Party (PP) lost its majority. Spain seems that is heading for political uncertainty after the general election produced a deeply fragmented parliament with little chance of a stable government majority over the next four years. Spain’s next government will be handled a country in the midst of a strong but incomplete economic recovery, with the national output set to grow by more than three per cent in 2016, and unemployment falling steadily over the past two years. Moreover, the jobless rate, at more than 22 per cent, remains one of the highest in the western world, and concern is mounting over inequality and a lack of well-paid, stable jobs. Furthermore, the country has also been shaken by corruption scandals, and by tensions between the government in Madrid and the independence-minded region of Catalonia.

Released during the Asian session, RBNZ Credit Card Spending rose 8.5% versus the previous of 7.8%, while Japanese All Industries Activity rose 1.0% beating the estimated 0.9%. USD/JPY remained near the 121.40 area while NZD/USD near the 0.6740 area.

Released during the early European session, German Producer Price Index (PPI) declined -0.2%, which was in line with the economists’ expectation.

The economic calendar for the day would be rather light with few economic releases. The key events for the day would be German Buba Monthly Report, Eurostat Consumer Confidence and the United Kingdom CBI Realized Sales.


Data releases to monitor:
EUR: German Buba Monthly Report, Consumer Confidence.

GBP: CBI Realized Sales.

Trade Idea of the Day

NZD/USD


Currently the pair is trading at 0.6744. Traders must monitor the 0.6840 resistance level and the support level 0.6635 for possible breakouts. A possible scenario would be a movement towards the 0.6740 support level, where a break may lead to 0.6715 level and possible to 0.6680. An alternative scenario could be a bounce upwards after testing the 0.6740 support towards the 0.6775 resistance level, where a break may lead to the 0.6800.

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