Run-up to the FED meeting

December 15, 2016

The US Dollar clings to the 101 level ahead of the FED decision, as investors are focused on Yellen’s tone towards the future tightening timeframe. The greenback has cleared an upward path against the Japanese Yen after a quick test at the 116 level on Monday, waiting for the FED signal to strengthen more against the Japanese currency.

The Chinese Industrial production and Retail Sales in November topped projections, showing a positive string of economic data from the second biggest economy in the world. The growth in both key drivers of the economy – industrial production and consumption – helped to ease the concerns over the loosened lending policy dangers in the country.

Oil shows an attempt to extend the rally although it is running out of growth catalyst. The market retains a buoying mood consolidating before the rally to $60 per barrel.

Gold is trading in the red zone demonstrating what is left of the pressure from the rate hike expectations, which will further deepen the yields of the safe heaven. The British Pound jumped to the 1.27 level due to the positive deviation in Novembers CPI report adding optimism to the market about the fate of the independent UK economy.

Euro index plunged by 0.23%  as the ECB decision to extend the asset-purchase program weighs down on the European currency. At the same time, Dollars index trades on positive zone ahead of the monetary tightening announcement by the FED.

The European indices trade in green, as well as, the UK equities which were propelled by stimulus pledge of the ECB and upsurge in Oil prices.  DAX rose 0.76%, FTSE 100 +0.58%, CAC 40 +0.70%, Euro Stoxx 50 +0.98%, IBEX 35 gaining 1%. Japanese Nikkei 225 extend gains as the weak national currency props up local exporters.

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