MARKET BRIEFING – LONDON OPEN 05.11.2015
During yesterday’s afternoon testimony to the House Financial Services Committee in Washington D.C, the Federal Reserve chairwoman laid out the case for an increase in the Federal Funds rate taking place on December 15-16.
In an interesting debate, Mr. Brad Sherman who is affiliated to the Democratic Party and a member of the United States House of Representatives for the state of California championed the need for delaying a rate increase until the Spring of 2016.
However, the line Mr. Sherman took was a somewhat unorthodox line as he called on the guidance of a higher authority in the form of God.
Sherman said. “God’s plan is that things rise in the spring, and so if you want to be good with the Almighty, you might want to delay until May.”
Yellen’s, however, ignored for calls of divine intervention by saying. “What the committee has been expecting is that the economy will continue to grow at a pace that is sufficient to generate further improvements in the labour market and to return inflation to our 2% percent target over the medium term. If the incoming information supports that expectation then our statement indicates that December would be a live possibility”.
Although Mr. Sherman’s comments might seem as an interesting sideshow to the real debate that is now taking place over the timing of the first interest-rate increase, the comments expressed by this politician does in some way highlight the divisions in opinion that is currently gripping the financial markets and to some extent the Federal Reserve Open Market Committee.
Janet Yellen is, of course, trying to prepare the ground for a rate increase. In itself, a more hawkish tone that was adopted yesterday will cushion the blow when rates do eventually increase.
The market is currently pricing a 50 / 50 coin toss chance that the FOMC will increase rates in December. However, we do have a lot a data to come before the committee members have to make their decision.
If we see an improvement in data then the possibility of a rate increase will be enhanced. We will get out first clues tomorrow afternoon when the Bureau of Labor Statistics publishes the latest job numbers with the Non-Farm Payrolls and Average Hourly Earnings as always being of paramount importance.
EURUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.0960
Target 2: 1.0770
Projected range in ATR’s: 0.0098
Daily control level: 1.1050
GBPUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.5470
Target 2: 1.5250
Projected range in ATR’s: 0.0088
Daily control level: 1.5445
USDJPY
The intraday technical outlook
Trend 1 hour: Up
Target 1: 122.30
Target 2: 120.80
Projected range in ATR’s: 0.76
Daily control level: 120.60
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.000
Target 2: 0.9850
Projected range in ATR’s: 0.0080
Daily control level: 0.9800
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.3265
Target 2: 1.3030
Projected range in ATR’s: 0.0116
Daily control level: 1.3050
AUDUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.7215
Target 2: 0.7100
Projected range in ATR’s: 0.0072
Daily control level: 0.7110
GOLD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1121.00
Target 2: 1093.00
Projected range in ATR’s: 14.15
Daily control level: 1138.55
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 48.65
Target 2: 45.60
Projected range in ATR’s: 1.53
Daily control level: 48.85
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