'Fed rate hike not priced in, Draghi could over-deliver, EURUSD still has room to fall' - Yohay Elam, Forex Crunch

YOHAY ELAM
PROFILE
• Current Job: Analyst at Forex Crunch
• Career: Founded Forex Crunch. Has been in the FX markets since 2005. Speaker and host at FXStreet Live Video channel.

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Yohay Elam has been into forex trading since 2005, and shares the experience and the knowledge that has accumulated. Like many forex traders, Elam has earned the significant share of knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always been of interest to him.

He founded Forex Crunch and is now one of the main speakers on our Live Video channel, hosting "Europe Live Market Open" every day from 8:00 to 9:00 GMT.

Draghi has just reaffirmed its dovish stance. Do you think an ECB move in the next meeting is a done deal? More QE or negative rates? Or both?

New policy measures by the ECB are a done deal. In addition to Draghi's words, the meeting minutes showed that only dramatic news could change the central bank's mind. According to recent reports, a cut of the already negative deposit rate has a better chance than buying more bonds every month. However, Draghi has shown his ability to under-promise and over-deliver, so a powerful mix of measures is on the cards.

How much of the potential December ECB and Fed moves do you think have been priced in the EURUSD?

While we have had all the preparations and EUR/USD has already fallen, I believe that there is a bit more room to the downside. As aforementioned, Draghi has shown his ability to over-deliver, by announcing a QE program at a pace and a total scale of more than had been expected back in January. Regarding the Fed, there are still skeptics that find it hard to see a rate hike for the first time in 9 years given global headwinds and no inflation. So, the actual hike is not fully priced in. Historically, we have seen the dollar slide after the beginning of tightening cycles, but a "buy the rumor, sell the fact" reaction could wait for 2016.

EURCHF is slowly trending down since September. Do you think the SNB could have to act again if the ECB makes a move in December?

The SNB made it clear that it intervened, is intervening and will intervene. Despite the trend lower in EUR/CHF, the ranges are tight. An abrupt fall in the value of the euro in December is set to trigger even more intervention to weaken the franc.

AUDUSD has made another move upwards in the last week or so. Is the pair now stuck in a 0.70-0.74 range after the long downtrend of the last year?

There are certainly good reasons for the stabilization and rise in the Aussie: a strong jobs report and a central bank that is basically happy with the exchange. The 0.75 level that RBA Governor Stevens referred to in the past could be the line in the sand for verbal intervention, especially if commodity prices continue sliding.

We've seen some volatile moves in the oil during the past week. WTI went just below 40$ but then quickly bounced to 42$. Can the crude bulls avoid new yearly lows prior to year end?

There is just too much oil sloshing around markets. The inventory build up in September, which is a rare event, the return of Iran to the markets and the unwillingness of OPEC nor other producer to unite, could keep the pressure on oil prices. The fall under $38 in WTI was seen in August during the stock market crash and seems to me like a swing low that will not be repeated soon, but neither will a significant rise. Perhaps $40 will serve as a "magnet" for the black gold towards year end.