The buy dollars wear diamonds theme is back in the FX market this morning, as the Fed provided some subtle changes in the statement whilst the dot plot suggested a slower transition to rate rises.
The Janet Yellen press conference has been deemed as hawkish as again the Fed Chair has given a time scale to a new reference, much like she did earlier in the year when describing ‘considerable time’ as a six-month period, with the new ‘patience’ language described as ‘a couple of meetings’, adding of course that every policy decision is data-dependent.
The overall tone has given me the view that the Fed are in no hurry to raise rates, as flexibility has been given as the ‘considerable time’ language has been replaced with ‘patience’ in describing rate increases. The forward guidance change is being likened to the language change of 2004.
The SNB has surprised the markets this morning by introducing negative rates, with the below hitting the wires catching a few lethargic traders on the hop in early European trading by moving the deposit rate to -0.25%.
This may be coincidental but the detail reveals the move to negative deposit rates is effective from the 22nd of January, which is the same day as the next ECB meeting which may raise the market expectation of further QE measures from the ECB.
*SNB INTRODUCES NEGATIVE INTEREST RATE OF -0.25%
*SNB SAYS LIBOR TARGET RANGE IS -0.75% TO 0.25%
*SWISS FRANC WEAKENS 0.3% VERSUS EURO TO 1.20402
*SNB REAFFIRMS MINIMUM EXCHANGE RATE FOR FRANC
The data today from across the pond this afternoon is of a secondary tier with the weekly jobless claim count, along with Philadelphia Fed business survey complete with leading indicators.
Supports 1.2245-1.2230-1.2100 | Resistance 1.2350-1.2400-1.2445
Supports 118.00-117.50-116.25 | Resistance 119.00-119.45-119.90
Supports 1.5540-1.5500-1.5430 | Resistance 1.5685-1.5740-1.5820
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.