Daily Update - 13th December 2017
Yesterday’s Market Yesterday’s explained The FX market got in motion this Tuesday, with the greenback standing victorious ahead of Fed's monetary policy announcement. A series of factors combined to drive the EUR/USD pair to its lowest since November 21st, starting with a disappointing German ZEW survey, which showed that business sentiment unexpectedly decreased in the country and for the whole EU in December. Euro Declined against the dollar on Tuesday as the dollar strengthened as the Federal Reserve began a two-day policy meeting where it is widely expected to raise interest rates for the fifth time since 2015. Investors will be watching for any signals that Fed officials are more optimistic on the prospect of faster growth as lawmakers appear close to passing a large overhaul of tax code of clues on how many further rate increase are likely next year. On the data front, U.S. producer price data on Tuesday showed an increase in wholesale inflation, increasing hopes that price pressures may be rising from sluggish levels. Sterling declined against the dollar on Tuesday as the stronger dollar offset upbeat UK economic data. British inflation unexpectedly nearly hit a six-year high in November, with investors betting would have little effect on how soon the Bank of England would raise interest rates again. Consumer price inflation hit an annual rate of 3.1 percent in November, the data showed above economists’ average expectations in a poll for another 3.0 percent rise. Today’s Market Today’s Focus This day, investors focus will be the Fed’s statement at the conclusion of the meeting for concern about tepid inflation. The US will release its November inflation figures early Wednesday, while in the American afternoon, the Federal Reserve will announce its latest monetary policy decision. The central bank is largely expected to raise rates by 25 basis points while presenting a new dot plot and fresh outlooks, which this time, will probably be more relevant than the hike itself. The Sterling may find some relief this Wednesday, as the kingdom is scheduled to release its latest employment figures. The sector has been performing well, despite the Brexit, with market's attention focused on wages' growth, as salaries have been lagging inflation.
