Pre-FOMC Positioning

15 December, 2015

The dollar is seeing modest settling pressure overnight and more so at the start of the European session against the single currency. The sense is that the market is getting more nervous of being long dollars ahead of the FOMC meeting result tomorrow, given that the hurdle to a bullish outcome looks pretty high. EURUSD has moved above the 1.1050 level and is trading at levels last seen late October, with the price action suggesting that this is where the longer-term short positions are still residing. Cable also under some pressure below the 1.5150 level, with USDJPY once again nudging towards the 120 level. The Aussie has been a little more resilient overnight, with the latest set of minutes from the RBA underlining the view that rates are going nowhere in the short-term. That said, easing hopes are not totally dead in the water, with the RBA reiterating that the outlook for inflation “may afford some scope for a further easing of money policy” if needed to support demand. Such language is likely to keep two-way price action alive on the Aussie. Finally on the overnight news, note that the USDCNY mid-point has moved higher for the seventh consecutive session.

For today, UK markets will be watching CPI data at 09:30 GMT, where the headline rate is seen moving back into positive territory at 0.1% YoY (from -0.1% YoY in October). The inflation outlook has continued to quell any expectations for a near-term hike in rates from the Bank of England, with the latest push lower in energy prices set to push down on the recovery in headline inflation over coming month as the fall in prices at the start of this year falls out of the calculation. The market pricing continues to suggest that the Bank of England will not move until the end of next year, which may not be fully priced into sterling at this time. Note that US inflation numbers are seen later today at 13:30 GMT.


Source link  
Markets recover after the drop

The markets decline on investors' fears that trade conflicts will drag on and slow down demand, and this dynamic coincided with breaking through important...

Markets pressured by Huawei problem

Alphabet and some other American IT companies have suspended business with Huawei, which is one of the first examples of major consequences for...

The climate is changing rapidly

British people need to fly less, drive electric cars, eat little meat and turn their home thermostats down to 19 degrees Celsius (66 Fahrenheit) in order to rein...


Chinese stocks saw their worst week

Chinese stocks have taken investors on a ride this year. Shanghai and Shenzhen have been the best performing global markets this year, with the Shanghai...

Risk-sensitive currencies on the rise

Stock markets show growth after the release of strong data for China and Japan as their respective PMIs were better than expected which supported...

Trump again puts pressure on OPEC

President Donald Trump told OPEC on Thursday that its members should start pumping more oil, marking his second warning to the producer group this year...


Turkish lira fell by 5% before elections

The Turkish lira dropped by as much as 5 percent against the dollar on Thursday morning, as the country gears up for elections this weekend. The greenback...

May won't ask for a long Brexit delay

Prime Minister Theresa May won't ask the European Union for a 'long' delay to the Brexit deadline, her office said, after pro-Brexit ministers objected...

Demand for safe assets grows

Markets remain under moderate pressure, despite the Fed comments. Powell's semi-annual speech in Congress reinforced expectations that the US Central Bank...

  


Share it on:   or