Fundamental outlook for the major pairs and important news events.12th December – 16th December
There has been a massive chaos in the financial industry from the very beginning of the year 2016.The FED was supposed to hike their interest rate in the middle of 2016 but due to the ongoing weak economic performance they have delayed their rate hike. However, thighs are favored the FED hike decision recently as the performance significantly improved over the last two months. Though the starting of the last week was not that great for the green bucks but in the last trading day the dollar gained back its strength in the market to a significant amount. Professional long-term investors are suggesting this sudden turn back of the dollar as a positive sign for the rate hike decision on 14th December.
There has been a sharp rise in the U.S dollar index which measure the dollar strength against the six major currencies in the world economy. The U.S index went up to 101.60 on Friday’s trading session and it was up by 0.48% and considering the overall performance of the last week, it ended up with 0.75% gain in the market. According to the FED rate hike monitor tools, there is 91.3% chance that the FED will hike their interest in the upcoming FOMC meeting minutes but investors are nearly 100 percent sure that rate hike will do by the FED officials in the month of December.
Change of interest rate is very high impact economic event in the financial world. If FED comes up with a hawkish hike in the FOMC meeting minute then the green bucks will gain immense strength in the market and it will become more lucrative to the investors. The strength of the U.S dollar significant against the Japanese yen as it went up by 1.18% to 115.36 on last Friday. This surge in the USDJPY pair is the strongest bullish move since 9th February 2016.On the contrary, the EURO suffered an extensive loss in the financial market as ECB president came out with a very dovish statement in the ECB press conference.
The bond-buying stimulus program will be continued for another six to nine month to bring stability in the European zone and such a dovish statement initiated strong selling pressure in the EURUSD pair. In the last trading session, the Euro was down by 0.57% and closed at the price 1.0555.If the assets purchase program continues to progress with a spending of €60 billion per month then we might see a historic low in the EURUSD pair at the end of the year 2017.On the other side, the great Britain pound managed to find some buying pressure in the market and pushing the EURGBP pair for loss 0.47% in the market.
The most shocking event for the year 2016 was the Brexit event and on that, even the British pound was smashed down into the ground against its all major rivals in the forex industry. After hitting historic low in the market the GBPUSD pair now trying to start its bullish correction despite the imminent strength of the U.S dollars. On the other side, the OPEC has cut the oil production to save the world from the energy crisis and this has pushed the U.S dollar into seven weeks low against the Canadian dollar in the forex market. The fell sharply to the low of 1.3153 on last Friday which is the largest fall till October 20.The upcoming week is going to play important role in the movement of all major currency pairs in the forex market since investors are overly sure that the FED will hike their interest rate in this FOMC meeting minutes. To be precise the whole world is now looking at the 14th December FOMC meeting minutes to extract a clear overview of the financial market .though the FED interest rate decision is the most important event for this upcoming week let’s see some of the other major fundamental news releases in the market.
The Japanese Yen is suffering from extensive selling pressure in the market and on Monday the core machinery orders and producers prices data will be released on behalf of the Japanese economy. If this data comes out positive then we might see a decent strength of the Japanese Yen from the very beginning of this week. Followed by this news release the U.K is going to release the industry data on the house price and positive data on that release will support the bullish move of the GBPUSD pair. On Tuesday the consumer price inflation is also going to be published and investors will closely observe this data to gauge the prevailing strength of the sterling in the forex market. On the other side, the EURO might recover some losses in the market if the German economic statement comes positive in Tuesday data.
Wednesday is extremely important date since the FED officials will release their interest rate hike decision in their FOMC meeting minute. Investors and researcher are overly sure that the FED will hike their interest rate in this upcoming FOMC meeting minute. A hawkish hike gives the green buck’s immense strength in the global market and investors will draw the pathway for all the major currency pairs. On Thursday the Aussie government will publish the monthly job reports but the market will not be affected by that data since the rate hike decision will rules the movement of all the major currencies pairs for the remaining days of the week.