Saturday November 7, 2015 - 14:57:24 GMT
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December Rate Lift-Off Assured
John M. Bland
October Jobs Data Signal A Hike Hike
The Fed got an early Christmas present with a considerably stronger than expected October employment report. A December 16 hike is apparently now a given. The markets never rest and their focus will now turn to the next policy move. I think the Fed plan (hope) had been for a December hike and then another one some time in 2Q16. That should be followed by a pause until after the November election. Their wish has been granted. Markets have been obsessed with the initial rate decision because they know that this will be the first of a long series of rate hikes. All the way back to Bernanke, the Fed has reassured markets that the increase in rates will be slow and gradual. The anticipation is a lot worse than the even. The pain will not be noticeable for most.
Forex Market Developments
Markets had been set up long USD ahead of the jobs data and the dollar then gained after the report was much stronger than forecast. I have noticed recently that forex trading has started to become a lot more sensitive to interest rates now that monetary policies, especially a Fed tightening after seven years has come into play. While I continue to watch my equity correlations, I am back following interest rate differentials between major economies once again.
The upcoming week is a relatively quiet period for major economic data.
-- Monday November 9, DE- Trade
-- Tuesday November 10, CN- CPI, US- Import Prices, API Crude
-- Wednesday November 11, FR/CA/US- Bank Holiday, GB- Employment, Output, Weekly Crude
-- Thursday November 12, AU- Employment, DE- HICP, EZ- Industrial Production, US- Weekly Jobless, JOLTS Survey
-- Friday November 13, DE/EZ GDP, US- Retail Sales, PPI
Be sure to refer daily Global-View to see the continuously UPDATED Economic Calendar and the Forex Forum for the complete list of key items (actual data, selected charts, etc.) as they are released.
John M. Bland
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