The Fed can start tapering already this November, oil is rallying pushing the Canadian dollar up! Jump in to know more!
News to trade on December 20
- Yesterday, the Federal Reserve raised its interest rate from 2.25% to 2.5%. However, the comments by the Fed Chair Jerome Powell brought some uncertainty to the market. Fed officials predicted two rate hikes in 2019, instead of three mentioned during the previous meeting. In addition, they cut the long-term expectations for the policy rate. It resulted in the mixed trading of the USD.
- In other news, the European Commission brought some positivity to the euro traders. The European Commission vice president Valdis Dombrovskis confirmed the commission has reached a deal with Italy on its budget. It will avoid the excessive deficit procedure and avoid disciplinary measures. As a result, EUR/USD has gained significantly. For now, the pair has already crossed the 1.1408 level. The next resistance for the pair lies at 1.1513. If the USD gains back its strength, the pair may fall back below the 1.1408 level towards the support at 1.1338.
- During the Asian session, the Bank of Japan kept its monetary policy unchanged, as expected. USD/JPY was unaffected by this decision, driven mostly by the weak USD and the risk-off sentiment across the equity markets. At the moment the pair has been targeting the support at 111.61. If it is broken, the next support lies at 110.99. If the USD gains back its strength, the pair will move up to the resistance at 112.49.
- The Bank of England will present its monetary policy summary and announce its official bank rate votes at 14:00 MT time. The rate hike is not expected, however, the BOE governor Mark Carney and his colleagues may provide some supportive data for the British pound and suggest some hints for further bank’s decisions in case of a no-deal Brexit. The British pound has already bounced from the strong support at the central pivot at 1.2605. For now, GBP/USD has been gaining towards the resistance at 1.2735. The hawkish BOE will make the cable rise higher to the 1.2735 level. Otherwise, if the BOE is dovish or the actual level of the retail sales disappoints the investors, the risks of the fall below the 1.2605 support will increase.
- The Australian dollar has been rising after the release of employment change. The indicator increased by 37 thousand employed people (vs. 20 thousand people expected). The aussie has tested the resistance at 0.7133. If the sentiment in the market changes, bulls will manage to break this level. The next resistance is placed at 0.7260. If the USD strengthens, AUD/USD will fall towards the support at 0.7094. The next support lies at 0.7037.
- Gold has been moving up amid the weak USD. Today, it has already risen towards the resistance at $1,258, reaching the highs of July 2018. In case of the strong USD, the price for the yellow metal will fall downwards to the support at $1,240.
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Germany, the leading economy in the Euro Zone, will reveal one of the key economic indicators – German Ifo Business Climate on September 24 at 11:00 MT time.
The Bank of England will hold a meeting on Thursday at 14:00 MT time (GMT+3).
Commodities (iron ore, oil) and commodity-linked currencies (AUD, CAD) surged. West Texas Intermediate has reached $75 a barrel, while Brent rose to the highest mark since October 2018.
Although Jerome Powell’s speech sounded hawkish on Wednesday, September 22, markets did not get scared and the main stock indices got bought back…
Turkey’s central bank governor was at a crossroads: to hold interest rates and take a risk to be fired like it was for three governors before him, or to comply with the president, to cut rates, and to risk the market. Let’s find out, how to react to the rate cut.