[img class=alignnone size-full wp-image-5506 src=https://fxcox.files.wordpress.com/2015/11/traders.jpg]Good Morning Dukascopy Community...'ll see my Fx Daily Outlook.
Friendly Day. EUR/USD The Euro initially pushed sharply higher on Tuesday with a peak just above 1.1050 before finding tougher resistance and drifting back towards 1.1000. There was a slightly stronger than expected increase in the German ZEW index to 16.1 from 10.4, maintaining evidence of robust demand, although markets were focussed elsewhere ahead of the Fed decision. The US New York Empire index was slightly better than expected at -4.6 from -10.7 previously while the NAHB housing index edged lower to 61 from 62. Both November headline and core monthly CPI increases were in line with expectations at 0.0% and 0.2% respectively. The underlying annual increase was marginally higher than expected at 2.0% from 1.9% and underlying services-sector inflation pushed towards the 3.0% level which will maintain overheating concerns within sectors outside manufacturing, also illustrating divergent policy pressures on the US central bank. The dollar drew significant support from the CPI data and a widening of yield spreads over German bunds with an improvement in risk appetite also providing net support. The US 2-year yield pushed to highs near 0.98%, the highest level since May 2010 while risk appetite improved, which curbed any scaling-back of Euro-funded carry trades. The Euro overall dipped sharply to lows near 1.0900 before stabilising with the dollar overall at one-week highs. There will be a high degree of volatility surrounding Wednesday’s Federal Reserve decision even with strong expectations that the FOMC will deliver a 0.25% rate increase, the first hike since 2006. FOMC rate projections for 2016, international comments and Yellen’s press conference will all be important for overall dollar sentiment. JPY After finding support below 120.50, the dollar gained steady support on Tuesday with an initial move to the 121.20 area. There was a strong advance for European equity markets which helped push the Japanese currency weaker. US bond yields moved higher during the New York session with 10-year rates near 2.27% and provided direct dollar support. There was a further improvement in risk conditions as US equity markets also gained ground and the dollar pushed to highs near 122.00. Asian equity markets gained significantly on Wednesday which maintained a more positive risk environment while Japan’s PMI manufacturing index was little changed for December and the dollar maintained a firm tone. There will inevitably be high volatility following the Fed’s interest rate decision with sharp moves on yield and risk expectations. GBP After finding support on approach to 0.7300 against the Euro on Tuesday, Sterling rallied to the 0.7225 area. A stall in the recovery, allied with substantial dollar gains, pushed the UK currency to lows below 1.5050 in US trading. Headline UK consumer inflation was in line with expectations with an increase to 0.1% for November from -0.1% previously as a low figure last year came of the calculation while the core rate edged higher to 1.2% from 1.1%. There was a sharper than expected decline in producer prices at the input and output levels, reinforcing the lack of inflationary pressures. The latest earnings data will be watched closely on Wednesday for further evidence on labour-market trends. In comments on Tuesday, Governor Carney stated that the there was no longer a case for considering raising interest rates around the end of this year as the inflation criteria had not been met. Despite concerns surrounding the buy-to-let sector, the comments overall provided no Sterling support with the Euro strengthening on Wednesday. CHF The dollar again found support just below 0.9800 against the franc on Tuesday and then pushed sharply higher with a peak around 0.9925 as the US currency gained wider support while the Euro was able to find support just above the 1.0800 level. Continuing support at this area again suggested possible central bank intervention. The latest PPI data registered a stronger than expected figure for November with the annual decline at -5.5% from -6.6% previously which will provide only limited National Bank relief. Risk conditions following the Fed decision will be watched very closely. Regards And Follow Me on Twitter>>>> @FxCox
Friendly Day. EUR/USD The Euro initially pushed sharply higher on Tuesday with a peak just above 1.1050 before finding tougher resistance and drifting back towards 1.1000. There was a slightly stronger than expected increase in the German ZEW index to 16.1 from 10.4, maintaining evidence of robust demand, although markets were focussed elsewhere ahead of the Fed decision. The US New York Empire index was slightly better than expected at -4.6 from -10.7 previously while the NAHB housing index edged lower to 61 from 62. Both November headline and core monthly CPI increases were in line with expectations at 0.0% and 0.2% respectively. The underlying annual increase was marginally higher than expected at 2.0% from 1.9% and underlying services-sector inflation pushed towards the 3.0% level which will maintain overheating concerns within sectors outside manufacturing, also illustrating divergent policy pressures on the US central bank. The dollar drew significant support from the CPI data and a widening of yield spreads over German bunds with an improvement in risk appetite also providing net support. The US 2-year yield pushed to highs near 0.98%, the highest level since May 2010 while risk appetite improved, which curbed any scaling-back of Euro-funded carry trades. The Euro overall dipped sharply to lows near 1.0900 before stabilising with the dollar overall at one-week highs. There will be a high degree of volatility surrounding Wednesday’s Federal Reserve decision even with strong expectations that the FOMC will deliver a 0.25% rate increase, the first hike since 2006. FOMC rate projections for 2016, international comments and Yellen’s press conference will all be important for overall dollar sentiment. JPY After finding support below 120.50, the dollar gained steady support on Tuesday with an initial move to the 121.20 area. There was a strong advance for European equity markets which helped push the Japanese currency weaker. US bond yields moved higher during the New York session with 10-year rates near 2.27% and provided direct dollar support. There was a further improvement in risk conditions as US equity markets also gained ground and the dollar pushed to highs near 122.00. Asian equity markets gained significantly on Wednesday which maintained a more positive risk environment while Japan’s PMI manufacturing index was little changed for December and the dollar maintained a firm tone. There will inevitably be high volatility following the Fed’s interest rate decision with sharp moves on yield and risk expectations. GBP After finding support on approach to 0.7300 against the Euro on Tuesday, Sterling rallied to the 0.7225 area. A stall in the recovery, allied with substantial dollar gains, pushed the UK currency to lows below 1.5050 in US trading. Headline UK consumer inflation was in line with expectations with an increase to 0.1% for November from -0.1% previously as a low figure last year came of the calculation while the core rate edged higher to 1.2% from 1.1%. There was a sharper than expected decline in producer prices at the input and output levels, reinforcing the lack of inflationary pressures. The latest earnings data will be watched closely on Wednesday for further evidence on labour-market trends. In comments on Tuesday, Governor Carney stated that the there was no longer a case for considering raising interest rates around the end of this year as the inflation criteria had not been met. Despite concerns surrounding the buy-to-let sector, the comments overall provided no Sterling support with the Euro strengthening on Wednesday. CHF The dollar again found support just below 0.9800 against the franc on Tuesday and then pushed sharply higher with a peak around 0.9925 as the US currency gained wider support while the Euro was able to find support just above the 1.0800 level. Continuing support at this area again suggested possible central bank intervention. The latest PPI data registered a stronger than expected figure for November with the annual decline at -5.5% from -6.6% previously which will provide only limited National Bank relief. Risk conditions following the Fed decision will be watched very closely. Regards And Follow Me on Twitter>>>> @FxCox