MARKET BRIEFING – LONDON OPEN 22.09.2015
Septembers Federal Reserve meeting and the press conference has passed with a whimper. An overly dovish Federal Reserve Open Markets Committee surprised the markets by the tone and wording of that accompanied their decision to keep interest rates at the <0.25% target.
According the FOMC’s calendar, the schedule has two more meetings for that will happen this year. The first meeting takes place on October 27 – 28 and the second on December 15 -16.
What should we expect from these meetings? In my previous post, I said that Janet Yellen and her colleagues on the FOMC are data sensitive. The two main current influences on the Federal Reserve decision-making process being the inflation outlook and the economic slowdown that is taking a hold off China and other Emerging Market nations.
However, the FOMC chairwoman did say that a decision to increase rates was still on the table. As soon as the conditions merited that action was required.
We have some five weeks of economic activity to be absorbed and deliberated before the next FOMC meeting takes place. Is it really possibly that a financial and economic slowdown that has persistently continued to worry global decision makers will abate over the next few weeks?
Will we see by October 28, improvements in the inflation outlook and Emerging Markets that are sufficient to give the FOMC committee members enough confidence to pull the trigger and hike interest rates? It is doubtful that the data will change that much even by the December meeting.
The markets are now stuck within a spiral of uncertainty as they become increasingly unsure of the Federal Reserve’s intentions. Last Friday the Bank of England’s Chief Economists argued the merits of even cutting UK interest rates. The British economy is seen as the one that closely resembled that of the United States. If influential voices within the Bank of England and are openly discussing the possibility of cutting UK interest rates, then the same discussion will also be taking place with the walls of the Federal Reserve building.
The possibility of an October or December lift off seems very unlikely. A move by the Federal Reserve to increase interest rates at one of the next two meetings could still happen. However, following the dovish position the FOMC has taken, such a decision would be out of step with their most recent statements.
EURUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.1295
Target 2: 1.1080
Projected range in ATR’s: 0.0108
Daily control level: 1.1330
GBPUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.5620
Target 2: 15400
Projected range in ATR’s: 0.0112
Daily control level: 1.5525
USDJPY
The intraday technical outlook
Trend 1 hour: Up
Target 1: 121.60
Target 2: 119.50
Projected range in ATR’s: 1.06
Daily control level: 119.70
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.9800
Target 2: 0.9620
Projected range in ATR’s: 0.0097
Daily control level: 0.9640
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.3355
Target 2: 1.3150
Projected range in ATR’s: 0.0104
Daily control level: 1.3175
AUDUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.7150
Target 2: 0.7040
Projected range in ATR’s: 0.0088
Daily control level: 0.7280
GOLD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1145.00
Target 2: 1120.00
Projected range in ATR’s: 12.54
Daily control level: 1129.00
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 47.00
Target 2: 43.00
Projected range in ATR’s: 1.88
Daily control level: 47.25
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