Monthly Archives: December 2016

The Fed’s decision not to frighten markets

The forecast for the week 12 – 16 December

Stock market

Nearing the moment of truth. The US Federal Reserve will announce a decision on monetary policy. Markets are almost 100% sure that the regulator will go on tightening. But so far no one is scared, and US S & P 500 continues to “rally Trump”, updating the historical highs.

Nevertheless, the fact that the rate increase and the subsequent comments by the US Federal Reserve in the event that they will be aggressive enough, making it clear that next year’s tightening may continue to be able to have on the S & P500 pressure.

Thus, the S & P500 (ES) can develop in the area of correction level 2210.75. But if the data on retail sales, industrial production and building permits, which will also be published next week, will be sufficiently strong to indicate a steady state of the economy, after a pullback in benchmark can resume growth.

Commodity and raw market

Brent crude oil attempts to gain a foothold above the level of 54.00, but the market is not fully convinced that the agreements on the reduction of production volumes will be performed, and therefore that the market finally, excess supply will be reduced.

On Saturday, December 10, will host a meeting of OPEC and countries outside the cartel, on the reduction of production. Russia is ready to cut down the volume of 300 thousand barrels per day. But, as noted by the officials, if there is no agreement of all countries, the deal could be derailed. Thus, if the output will be aware of the fact that the agreements reached, Brent (BRN) may try to update the highs, aiming at the movement in the area of 56.80.

Otherwise, wait for the fall is the area of 52.60 level, taking into account the increase in OPEC production in November to 370 thousands barrels per day and the continuing imbalance of supply and demand.

Currency market

Next week will be published quite a large block of UK data. The market will watch for reports on the consumer price index, retail sales. Recently pound felt confident enough and if statistics are quite optimistic, pair GBP / USD will be able to resume growth.

Of course, most attention involve publication of the decision of the Bank of England’s monetary policy. Given that the pound is at a low level, the country’s inflation may accelerate, which will lead to the fact that the regulator refrains from hinting at the possibility incentives. Against this background, the pair GBP / USD against this background that can target the traffic to around 1.2770, and in case of its breakthrough on up to 1.2860.

Warning: Profitability in the past does not mean profitability in the future. Any projections are for information only and does not guarantee a result.