Daily Market update
Key data/event on 16/12/2021 Thursday
- GBP CPI y/y: exp. 4.8% vs. 5.1%
- USD Retail sales m/m: exp. 0.8% vs. 0.3%
- USD Core Retail Sales m/m: exp. 0.9% vs. 0.3%
- CAD CPI m/m: exp. 0.2% vs. 0.2%
- USD FOMC Economic Projections & Statements
- USD Federal Funds Rate: exp. <0.25% vs. <0.25%
- NZD GDP q/q: exp. -4.1% vs. -3.7%
- AUD RBA Gov Lowes Speaks
- AUD Employment change: exp. 203.0K
- AUD Unemployment rate: exp. 5.0%
- CHF SNB Policy Rate: exp. -0.75%
- EUR German Flash Manufacturing PMI & Flash Service PMI: exp. 57.0 & exp. 50.9
- EUR Flash Manufacturing PMI & Flash Service PMI: exp. 57.8 & exp. 54.2
- GBP Monetary Policy Summary
- GBP Official Bank Rate: exp. 0.10%
- EUR Monetary Policy Statement
The final FOMC meeting in 2021 announced that the Fed will double the pace at which it is scaling back purchases of Treasuries and mortgage-backed securities to $30 billion a month, attempting to conclude the program in early 2022, rather than mid-2022 as initially planned. The five-year breakeven rate on Treasury inflation-protected securities approached 2.8%, suggesting the Fed will be challenged to get inflation down towards its 2% target. Fed Chair Powell said that the economic developments and changes in the outlook warrants this evolution of monetary policy and the Fed members forecasted three rate hikes for 2022. Economists said FOMC is taking inflation seriously and is willing to hike the Fed funds target rate at a faster.
Fed’s Implied Fund Target Rate Dot Plot
Fed’s Implied Fund Target Rate Dot Plot
The dollar initially rallied on the headlines and posted new session record highs, but the gain quickly pared as the market already priced in the two rate hikes and almost 3/4 of the third hike before the FOMC meeting.
Asian data did not have much of an impact on the market as the Chinese data was largely mixed with a slight miss on retail figures and industrial protection. US retail sales increased less than expected in November, likely caused by the reduction of consumer demand after surging in the
AUDUSD Daily Chart:
Major movement in the Market:
Stocks
- The S&P 500 rose 1.6% as of 4 p.m. New York time
- The Nasdaq 100 rose 2.4%
- The Dow Jones Industrial Average rose 1.1%
- The MSCI World index rose 1.1%
Currencies
- The Bloomberg Dollar Spot Index fell 0.2%
- The euro rose 0.3% to $1.1294
- The British pound rose 0.3% to $1.3265
- The Japanese yen fell 0.3% to 114.05 per dollar
Bonds
- The yield on 10-year Treasuries advanced two basis points to 1.46%
- Germany’s 10-year yield was little changed at -0.36%
- Britain’s 10-year yield advanced one basis point to 0.74%
Commodities
- Brent crude oil was at USD/Bbl 71.47
- Gold was at USD/OZ 1776.71
- Iron ore was at USD/T 109.22