MARKET BRIEFING – LONDON OPEN 19.11.2015
Not many would have thought that when the benchmark Federal Funds target interest rate dropped under 0.25% in 2008 that it would stay at this level for some 7 years.
However, yesterday’s much-anticipated release of the FOMC minutes for October the markets received the clearest indication that the Chairwoman, Janet Yellen and her colleagues on the Federal Reserve committee are now finally ready to increase interest rates.
According to the Minutes of the October meeting, the Federal Reserve said that the economic outlook would have improved sufficiently, or in their words “be met” by the December meeting for an agreement to be reached to increase interest rates.
In a further hawkish message, the FOMC minutes noted, “The US financial system appeared to have weathered the turbulence in global financial markets without any sign of systemic stress.”
The market had expected that the Federal Reserve could have increased interest rates at the September gathering, however, concerns over the contraction of the Chinese and Emerging Market economies combined with patchy economic data led to the committee members taking a cautious approach.
Since October, there has been very strong news with respect to US employment with the last jobs report posting impressive Non-Farm Payrolls and Average Earnings numbers.
The October meeting took place before the positive US employment numbers were announced. However, barring a disastrous data being announced in December and with the China story dropping from the focus of attention it would appear that the Federal Reserve has no reasons why it should not raise interest rates next month.
Furthermore, one outcome of the tragic events that took place in France recently is the rapprochement in relations between the United States and her allies with Russia. A more stable geopolitical picture would do much to reduce risk and calm the nerves of investors and would be one less issue for the FOMC to worry about.
EURUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.0750
Target 2: 1.0570
Projected range in ATR’s: 0.0092
Daily control level: 1.0615
GBPUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.5330
Target 2: 1.5140
Projected range in ATR’s: 0.0095
Daily control level: 1.5185
USDJPY
The intraday technical outlook
Trend 1 hour: Down
Target 1: 124.25
Target 2: 122.95
Projected range in ATR’s: 0.66
Daily control level: 123.75
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.0270
Target 2: 1.0120
Projected range in ATR’s: 0.0075
Daily control level: 1.0125
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.3355
Target 2: 1.3250
Projected range in ATR’s: 0.0083
Daily control level: 1.3370
AUDUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.7175
Target 2: 0.7040
Projected range in ATR’s: 0.0069
Daily control level: 0.7070
GOLD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1086.00
Target 2: 1054.00
Projected range in ATR’s: 15.92
Daily control level: 1097.95
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 43.70
Target 2: 40.60
Projected range in ATR’s: 1.54
Daily control level: 42.70
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