Fed Speak Fails To Provide Fresh Info
Swissquote Bank Ltd | Nov 13, 2015 05:11AM ET
The US dollar strengthened during the Asian session after dollar bulls received a confidence boost from Fed members. New York Fed Chief Dudley appeared to be cautiously optimistic as usual and declared that the conditions for tightening “could be soon satisfied”. Even Chicago Fed Chief Evans, known for his more dovish stance, is starting to sing a different tune as he emphasized the need for a gradual tightening in monetary conditions but still backing a lift-off in 2016. Overall, we see that Fed members have been repeating the same speech for months now as they try to shift focus from the timing of the lift-off to the path which is supposed to be slow and gradual. Meanwhile, traders are impatient to get some fresh data from the US as the economic calendar has been very light this week so far. However, today's PPI report and retail sales will provide an updated picture of the US, which could be supportive for a December lift-off. Nevertheless, we maintain our stance that the real game changer will be the inflation report and specifically the release of the PCE deflator on November 25. EUR/USD found a strong support at 1.07 and has stabilised between 1.0675 and 1.0830 since then. With Mario Draghi continuing to reiterate that an increase/extension of the BCE’s bond purchase programme is likely, the risk is balanced for the currency pair as the market has already started to price in a significant rebound of the US economy and in case of disappointing numbers, the dollar could erased earlier gains. Retail sales are expected to print at 0.3%m/m, up from 0.1% in September, while the PPI should come in at 0.2%m/m versus -0.5% in the previous month.
On the equity front, stocks are blinking red across the board as spillover from the commodity sell-off raised concerns -- once again -- about China’s ability to drive global growth. West Texas Intermediate crude is down 6.60% since Monday, while its counterpart from the North Sea fell 7.10% over the same period. Palladium lost almost 13% over the past four days while platinum dropped more than 7%. copper is down roughly 4% while zinc retreated 4%. Consequently, the Shanghai and the Shenzhen Composite fell 1.43% and 2.39% respectively, while in Hong Kong the Hang Seng dropped 2.17%. In Japan, both the Nikkei 225 and the TOPIX lost ground as they are down 0.51% and 0.49% respectively. In Europe, the picture is not much brighter with futures pointing toward a lower open. The FTSE 250 is down 0.55%, the DAX 0.48%, the CAC 40 0.54%, while in Switzerland the SMI falls 0.57%.
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EUR/CHF is back above the 1.08 threshold, while USD/CHF finds its marks above its new support, namely parity. GBP/USD consolidates above 1.52, putting an end to the previous day bull run. On the downside, a support can be found at 1.5027 (low from November 6th), while on the upside a resistance lies at 1.5247 (high from November 12).
Today traders will be watching, producer and import price from Switzerland; CPI from Spain; GDP from Italy and the eurozone; retail sales, PPI and Michigan sentiment from the US.
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EUR/USD
R 2: 1.1387
R 1: 1.1095
CURRENT: 1.0772
S 1: 1.0458
S 2: 1.0000
GBP/USD
R 2: 1.5659
R 1: 1.5529
CURRENT: 1.5217
S 1: 1.5027
S 2: 1.4566
USD/JPY
R 2: 135.15
R 1: 125.86
CURRENT: 122.76
S 1: 120.07
S 2: 118.07
USD/CHF
R 2: 1.0240
R 1: 1.0129
CURRENT: 1.0026
S 1: 0.9739
S 2: 0.9476
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