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Data the focus ahead of Central Banks - ANZ

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 23, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Bali) - The Research Team at ANZ reviews the action from Monday, while adding that it is 'waiting time' until Central Banks, including the Fed and ECB, may much awaited big calls during December.

    Key Quotes

    "With markets biding their time until central banks deliver their verdict on the policy outlook, the focus remains the tone of the data."

    "Eurozone PMIs were generally stronger than expected and partly a consequence of accommodative financial conditions in place."

    "Whether or not this will be sufficient to prevent further ECB easing next week remains to be seen, but Draghi’s weekend comments suggest the ECB is likely to act given the considerable degree of spare capacity in place and perceived downside risks to the activity and inflation outlook."

    "Despite weaker than expected US data overnight, market odds of a December hike are currently 74%, with markets interpreting the unscheduled Fed meeting to consider the discount rate as a signal for future moves on the Fed funds rate (more details on page 2)."

    "Despite this, Treasury yields remain reasonably low despite their nudge up in recent weeks. Equity markets appear to be taking the prospect of Fed lift-off in their stride, taking reassurance from Fed signals of a gradual and stop start normalisation path."

    "The currency market also appears to be increasingly prepared for higher US rates, with last week’s CFTC data showing broad-based net USD buying and increasing short positions for the euro and commodity currencies."

    "A higher USD will help some non-USD exporters and may help encourage more interest rate convergence. A 65 US cent NZD is clearly a different prospect to the RBNZ than a 78 US cent one at the start of the year or the 88 US cent one last July, whereas the high USD will remain a headwind to the US export sector, and encourage the Fed to tread carefully.
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