IronFX Daily Commentary by Sakis Paraskevov | 07/01/2016
January 7, 2016 12:58 pm
Main points for Today
• Fed minutes: For some members the hike was a “close call” • Even though the Fed members’ unanimously voted to raise interest rates last month, some policymakers viewed their decision as a “close call” because of concerns about low inflation. • The debate over the outlook for inflation will be crucial to determine how gradual the future path of increases will be. Fed officials’ generally expect four more rate hikes vs market expectations of two. This suggests that there is more room for USD to appreciate, given that inflation picks up as the labor market improves. • Chinese stock markets stopped trading about 30 min after opening • Even though China’s stock market regulators announced new rules to restrict major shareholders of listed companies to sell their shares, this was not enough to stabilize the markets. • Chinese stock markets plunged more than 7% triggering an automatic halt to trading for the 2nd time in 4 days. • Spillover effects into other equity markets are likely, which could see funding currencies such as JPY, EUR and CHF outpacing their counterparts. • Today: • Germany: Factory orders and retail sales, both for November. The factory orders are expected to have slowed, while retail sales are forecast to have risen, a turnaround from the previous month. • Eurozone: Retail sales for December are expected to rebound after falling for the previous two months. Final consumer confidence for December. Overall, the market may pay more attention to retail sales, which could prove EUR-positive, at least at the release. • US: Initial jobless claims for the week ended on the 1st of Jan. Following the solid ADP employment report on Wednesday and just one day ahead of the NFP, this indicator may attract more attention than usual. A decrease in the claims could strengthen USD. • Canada: Ivey PMI for November. Given that the RBC manufacturing PMI for the same month declined, we see a strong possibility for the Ivey index to follow suit. CAD-negative.
Main points for Today
• Fed minutes: For some members the hike was a “close call”
• Even though the Fed members’ unanimously voted to raise interest rates last month, some policymakers viewed their decision as a “close call” because of concerns about low inflation.
• The debate over the outlook for inflation will be crucial to determine how gradual the future path of increases will be. Fed officials’ generally expect four more rate hikes vs market expectations of two. This suggests that there is more room for USD to appreciate, given that inflation picks up as the labor market improves.
• Chinese stock markets stopped trading about 30 min after opening
• Even though China’s stock market regulators announced new rules to restrict major shareholders of listed companies to sell their shares, this was not enough to stabilize the markets.
• Chinese stock markets plunged more than 7% triggering an automatic halt to trading for the 2nd time in 4 days.
• Spillover effects into other equity markets are likely, which could see funding currencies such as JPY, EUR and CHF outpacing their counterparts.
• Today:
• Germany: Factory orders and retail sales, both for November. The factory orders are expected to have slowed, while retail sales are forecast to have risen, a turnaround from the previous month.
• Eurozone: Retail sales for December are expected to rebound after falling for the previous two months. Final consumer confidence for December. Overall, the market may pay more attention to retail sales, which could prove EUR-positive, at least at the release.
• US: Initial jobless claims for the week ended on the 1st of Jan. Following the solid ADP employment report on Wednesday and just one day ahead of the NFP, this indicator may attract more attention than usual. A decrease in the claims could strengthen USD.
• Canada: Ivey PMI for November. Given that the RBC manufacturing PMI for the same month declined, we see a strong possibility for the Ivey index to follow suit. CAD-negative.
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