Global Markets:
- Asian stock markets: Nikkei up 1.70 %, Shanghai Composite gained 1.50 %, Hang Seng rose 1.00 %, ASX rallied 1.65 %
- Commodities: Gold at $1067.60 (-0.85 %), Silver at $14.05 (-0.80 %), WTI Oil at $35.47 (-0.15 %), Brent Oil at $37.22 (-0.65 %)
- Rates: US 10 year yield at 2.26, UK 10 year yield at 1.95, German 10 year yield at 0.68
News & Data:
- New Zealand GDP SA (Q3) QoQ: 0.9% (exp 0.8% prev 0.4%)
- New Zealand GDP (Q3) YoY: 2.3% (exp 2.3% prev 2.4%)
- Hong Kong Monetary Authority Raises Base Rate To 0.75%
- Japan Trade Balance (Nov) JPY -379.7bln (exp JPY -449.7bln prev rev JPY 108.3bln)
- Japan Exports (YoY) Nov: -3.3% (exp -1.6% prev rev -2.2%)
- Japan Imports (YoY) Nov: -10.2% (exp -7.3% prev -13.4%)
- PBoC Fixes Yuan Reference Rate At 6.4757 (prev 6.4626)
- New Zealand Finance Minister English: NZD still looks overvalued, weaker NZD desirable
- Japanese EconMin Amari: Markets Already Factored In Concerns Of Fed Hike On EM – RTRS
FOMC Meeting:
- Fed funds rate rises to range of 0.25% to 0.50%; vote was unanimous
- Fed sees conditions warranting 'only gradual' rate increases
- Fed's projected funds rate was 1.4% at end-2016, unchanged vs Sept forecast
- Fed anticipates keep existing policy of reinvesting QE until normalization 'well under way'
- Labour indicators confirm underutilization of lab resources has diminished appreciably since early 2015
- Inflation is expected to rise to 2% over medium term
- Fed reasonably confident inflation to rise over medium term
Markets Update:
The USD strengthened after the Federal Reserve hiked rates by 25 bps and signalled that further rate hikes will be gradual. The Fed dots showed that the members expect the Fed Funds rate to stand at 1.4 % by the end of 2016 and that inflation will rise towards 2 % over the medium term. EUR/USD briefly rose above 1.10 immediately after the announcement, but eventually retraced all the gains and finished the day at 1.0910. In Asia, the pair extended losses and reached a low of 1.0830. Similar price action was seen in GBP/USD, which fell from 1.51 to 1.4920.
Meanwhile, USD/JPY took out the 122.20 resistance level and rallied to 122.60. The next key resistance level now lies at 123.20, followed by 123.60. The commodity currencies are little changed from yesterday's EU open. AUD/USD had another bounce off the 0.7160 level, while NZD/USD is consolidating around 0.6740.
Upcoming Events:
- 09:00 GMT – German IFO Business Climate
- 09:00 GMT – Norges Bank Rate Decision
- 09:30 GMT – UK Retail Sales
- 13:30 GMT – US Initial Jobless Claims
- 13:30 GMT – US Philadelphia Manufacturing Index
- 15:00 GMT – US CB Leading Index
