MARKET BRIEFING – LONDON OPEN 15.10.2015
The countdown to the October 27-28 Federal Reserve Meeting has begun. However, for those in the FOMC who wanted to see an uptick in the United States economy, the data continues to be depressing.
Yesterday afternoon’s economic data from across the Atlantic missed both the market and analyst expectations by a wide mark with both the retail and PPI numbers reporting much lower than expected.
With respect consumer spending, the Core Retail Sales was expected to report a contraction to -0.1% but in reality the actual that was released was published as -0.3%. The Retail Sales number which also includes automobiles, the expectation that there would be an increase to 0.2%, however, the report published by the Census Bureau indicated that consumer spending had only increased by 0.1%.
The news data from the Bureau of Labor Statistics with regards to the PPI was much worse. The Core Producer Price Index which excludes, food, energy and trade was expected to be reported as a small increase to 0.1%, however, the release was reported as a very disappointing -0.3%. The PPI number was no better with the expected decline to -0.2% being obliterated by an actual of -0.5%.
The Federal Reserve will be hoping that it will have better news data this afternoon on both the jobs and inflation front with the weekly Unemployment Claims and both the CPI and Core CPI data.
The case for increasing interest rates this year, continues to wane and now seems impossible that we will see a hike in October and improbable that the FOMC moves in December. This view has been reinforced by two Federal Reserve Governors urging patience with respect to the timing of the first rate increase.
The Governors in question being Lael Brainard and Daniel Tarullo. Brainard on Tuesday even went as far to say that the risk of moving prematurely was greater than the risk delaying the first increase.
With the Federal Reserve unable to find a consensus on the timing of an interest rate increase it would surmise to say the markets views of pricing in of a rate increase in Q2 of 2016 would make good sense.
EURUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.1565
Target 2: 1.1380
Projected range in ATR’s: 0.0093
Daily control level: 1.1355
GBPUSD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.5585
Target 2: 1.5370
Projected range in ATR’s: 0.0108
Daily control level: 1.5200
USDJPY
The intraday technical outlook
Trend 1 hour: Down
Target 1: 119.55
Target 2: 118.10
Projected range in ATR’s: 0.74
Daily control level: 120.35
USDCHF
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.9675
Target 2: 0.9405
Projected range in ATR’s: 0.0084
Daily control level: 0.9645
USDCAD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1.3040
Target 2: 1.2830
Projected range in ATR’s: 0.0105
Daily control level: 1.2900
AUDUSD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 0.7380
Target 2: 0.7210
Projected range in ATR’s: 0.0085
Daily control level: 0.7380
GOLD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1200.00
Target 2: 1167.00
Projected range in ATR’s: 16.40
Daily control level: 1163.00
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 49.00
Target 2: 48.50
Projected range in ATR’s: 1.80
Daily control level: 48.85
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