Talking-Forex.com
Talking-Forex.com
The final full week before Christmas has been dominated by one major event, with the FOMC raising rates for the first time in almost a decade. The Fed hiked rates by 25bps, which had been largely in line with market expectations, while also lowering median expectations for rate forecasts for 2017 and 2018. While many had expected the rate hike, Fed’s Yellen’s rhetoric was somewhat unknown with some anticipating that the release would be more of a `dovish hike`. In a reaction to the rate lift off, immediate volatility was seen in the USD and strength through the rest of the week, with the USD-index closing higher on the week by over 1% and gaining against the likes of EUR and GBP.
Despite the USD strength, USD/JPY ended the week softer after the latest BoJ policy decision left some doves in the market slightly disappointed. The BoJ surprised some by extending growth lending programs by a year and extending the average maturity of JGB holdings to 7-12yrs, while also announcing a new ETF program where it will purchase JPY 300bln annually in addition to the current ETF purchases. The ETF programme itself is considered to be relatively small in terms of size and as such despite initial strength in USD/JPY, the pair went on to fall by over a point during Friday’s trade.
The other notable focus point this week has come in the form of softness in the energy complex, with the USD strength exacerbating recent losses in the likes of Brent and WTI and as such seeing the price of both reaching fresh multiyear lows. As such commodity linked currencies were among the biggest losers this week, with USD/CAD breaking above 1.4000 for the first time since 2004, while USD/RUB ends the week in close proximity to its high of the year. Looking ahead to next week, with many participants away for the Christmas holidays, there is a possibility of choppy price action as a consequence of light volumes. In terms of economic data, releases are quite light, with much of the data front loaded to the beginning of the week. Highlights include the tertiary reading of Q4 GDP and personal income out of the US, while Japan sees the release of the latest CPI and employment data.
Despite the USD strength, USD/JPY ended the week softer after the latest BoJ policy decision left some doves in the market slightly disappointed. The BoJ surprised some by extending growth lending programs by a year and extending the average maturity of JGB holdings to 7-12yrs, while also announcing a new ETF program where it will purchase JPY 300bln annually in addition to the current ETF purchases. The ETF programme itself is considered to be relatively small in terms of size and as such despite initial strength in USD/JPY, the pair went on to fall by over a point during Friday’s trade.
The other notable focus point this week has come in the form of softness in the energy complex, with the USD strength exacerbating recent losses in the likes of Brent and WTI and as such seeing the price of both reaching fresh multiyear lows. As such commodity linked currencies were among the biggest losers this week, with USD/CAD breaking above 1.4000 for the first time since 2004, while USD/RUB ends the week in close proximity to its high of the year. Looking ahead to next week, with many participants away for the Christmas holidays, there is a possibility of choppy price action as a consequence of light volumes. In terms of economic data, releases are quite light, with much of the data front loaded to the beginning of the week. Highlights include the tertiary reading of Q4 GDP and personal income out of the US, while Japan sees the release of the latest CPI and employment data.
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