What a difference a day makes. There we were watching NFP shrink from +280k in June to +142k in October only for the number to rebound in an impressive way to print +271k and send the USD into a buying frenzy.
So from doom and gloom and everyone pointing to a rate hike only in March 2017, suddenly the bookies are betting that a rate hike on the 16 December is a forgone conclusion. Ah, how the financial market switches at the click of a button.
The funny thing is, on the 01 January this year we predicted that EURUSD will hit PARITY (1.00:1.00) come 31 December 2015…. Only a week ago I kinda threw in the towel. Oh how mistaken I was. Having said that, now that we know what we know, do not be surprised if the when the rate is announced the USD gets SOLD off (buy the rumour sell the fact). I fact come 16 December I would imagine the USD will be trading stronger than presently 1.0750 following which FX traders will cash in their chips and SELL the USD and take profit. It is certainly going to be a close one whether we actually manage to break through the years low 1.0463 ish before the meeting kicks off.
Saudi’s announced over the weekend they are prepared to continue pumping oil at the current rate to protect its global market share in spite of the financial pain it is having on their economy. New customers are being sought to unload to in the face of increased competition from Iraq and Iran.
In Spain, the Catalan independence campaign enters a new phase as they have voted to now begin the process of gaining independence. Do they realise that Barcelona (FC) would be affected and thrown out of the league (potentially).
Emerging market currencies feeling the pain of a stronger USD with the ZAR trading up to over USD 14.33….with more pain to come. Is this a surprise, not at all given that the EU is SA’s largest trading partner and therefore a weak EUR(USD) = Weak ZAR(USD). Watch this space but there is more to come!!!
GBP finally kicked off in the way we expected and fell off the cliff. This is my opinion is just the beginning with more GBP weakness on the way. 1.45 handle is my initial target before another larger leg lower is started. This is reinforced by comments over the past week or so that UK rates won’t rise until at least 2017 – not that a trust those comments.
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