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Your week Ahead in the Stock Markets as the Federal Reserve makes history

 

Last week was all about the Federal Reserve as they finally raised interest rates after months of speculation. The Greenback strengthened significantly against the majority of its counterparties last week, as the US central bank made history by raising interest rates a quarter point to 0.75%. EUR/USD hit a 21-month low, triggering a key psychological level, whilst GBP/USD slumped to a two week low after the news. The Dollar was boosted by the first rate hike in a year and a surprisingly hawkish dot plot chart suggesting more than expected hikes are to come in 2017. Fed Chair Janet Yellen took a rare victory lap, signalling the economic is strong and will improve further, allowing the Fed to continue to raise rates next year.

There is an air of caution in markets as we enter the last full trading week of the year, which historically sees a relatively quiet economic docket. In terms of market movement, we could see some surprisingly large price shifts as liquidity begins to slow down due to the holiday period. Low liquidity = high volatility. Although, the economic calendar is quiet it is not entirely empty this week. One interest event will be the Bank of Japan’s meeting, which rounds off a busy year for central banks. If the Bank of Japan can avoid another dovish tone we could see a bout of Yen strength just before the year end.

header_triangle Monday

A relatively light start to the last trading week of the year. Monday sees the only piece of high tier data released from the Eurozone this week. German Ifo Business Climate is forecast this morning to improve on October’s 110.4 to 110.7. Germany are the powerhouse of the Eurozone, therefore a decent reading here will no doubt give the Euro a boost this morning.

header_triangle Tuesday

The Yen has had a tough year this year, with a lot of the beating coming after the election. We could however see some fightback at Tuesday’s Bank of Japan rate decision and press conference. The BoJ are forecast to keep rates on hold at -0.10% but if the central bank can avoid a dovish tone we could see the Japanese Yen strengthen across the board.

  • BoJ Policy Rate
  • BoJ Press Conference

header_triangle Wednesday

Crude Oil inventories in the States is the only piece of high tier data released today. This piece of data has come to the forefront lately after this month’s OPEC meeting where a deal was struck to freeze production at 32.5m barrels per day. Oil is currently trading above the key psychological level of $50 a barrel.

  •  US Crude Oil Inventories

header_triangle Thursday

Thursday sees a busy day for the Greenback. We have the final reading of Q3 GDP from the States followed by core durable goods in the afternoon. The data is expected to be mixed with GDP forecast to tick higher to 3.3%, whilst core durable goods is due to decline to 0.2% after a strong November figure of 1.0%.

  • US Final Reading GDP
  • US Core Durable Goods Orders

header_triangle Friday

We finish the last trading week of 2016 with only one piece of notable data. UK current account is released Friday morning at half 9. The current account which measures the difference in value between imported and exported goods is forecast to climb to -28.3B, a four month high if met Friday morning.

  • UK Current Account
  Last week was all about the Federal Reserve as they finally raised interest rates after months of speculation. The Greenback strengthened significantly against the majority of its counterparties last week, as the US central bank made history by raising interest rates a quarter point to 0.75%. EUR/USD hit a 21-month low, triggering a key psychological level, whilst GBP/USD slumped to a two week low after the news. The Dollar was boosted by the first rate hike in a year and a surprisingly hawkish dot plot chart suggesting more than expected hikes are to come in 2017. Fed Chair Janet…

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