Yesterday, stock markets showed a single dynamic downwards and closed in red zone. Dow Jones fell down by 0.60%(19792.53), S&P 500 fell by 0.81% (2253.28), the Nasdaq went to the minus of 0.50% (5436.67). European indices also changed their color to red. Germany's DAX fell 0.35% (11244.84), British FTSE 100 slipped 0.28 percent (6949.19).
Today it is scheduled a lot of events and publications of macroeconomic data, which may affect investor decisions.
At 11:30 MSK Swiss Interest Rate Decision, SNB Press Conference.
At 11:30 MSK German Manufacturing PMI for December.
At 12:30 MSK Retail Sales for November will be published in UK.
At 15:00 MSK Interest Rate Decision for December will be published in UK.
At 15:00 MSK Bank of England's policy setting meeting, Minutes.
At 16:30 MSK Core CPI for November will be published in USA.
At 16:30 MSK Philadelphia Fed Manufacturing Index for December will be published.
At 19:15 MSK Bank of Canada (BOC) Governor Stephen Poloz Speaks.
Last night after the two-day Fed meeting, became aware about the new level of the key interest rate United States. It was increased for 0.25%, the decision was made unanimously by all members of the FOMC. The result is a range of rates in the diapason of 0.50 to 0.75 percent. Rate was raised for the first time this year. In their forecasts on monetary policy, Fed chair Janet Yellen announced that she expects three rate increases during 2017, which is for one above the September forecast. It was also reported that the tightening of monetary regulation meets the expectations of measures aimed at the economic growth from President Donald Trump, such as reducing taxes and government regulation of the financial sector, increase spending on infrastructure.
That decision was expected by most of market participants, therefore, a strong volatility was not observed. Pair EUR/USD dropped acutely because of the dollar rise and at the moment have reached 1,0468 that in several points from minimum for two years. The growth in the projected number of rate hikes next year gives the green light for the continuation of the strengthening of the dollar in the future. According to Janet Yellen it is scheduled nine of the rate hikes with the aim of reaching the level of 3% in 2019.
The stock market decreased after the statement. The index of wide market S&P 500 went down, closed yesterday's gap and stopped at the level of Friday's open. It is possible that after the aside movement at current levels, the index will continue its growth.
European stocks declined yesterday on profit taking and risk reduction of market participants before important decisions of monetary authorities, not only the US but also in Europe. Today its verdict on monetary policy will announce the Central banks of England and Switzerland.
Oil prices continued to decline following the growth of the US currency, the dollar, and quite contradictory data on reserves. On the one hand oil stocks fell more than expected to 2 million barrels, but at the same time significantly increased the production. Perhaps correction will continue to the level of $ 50 per barrel of Brent crude.
Sincerely, Global FX chief analyst Sergey Melnikov.