Daily FX Trading Update: FOMC Hiked Interest Rates to 0.50% – Dec. 17, 2015

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The Fed increased rates by 0.25% as expected, upgrading growth and employment forecasts for 2016 as well. Although they downgraded their PCE inflation estimates for next year, Fed head Yellen still showed confidence in US fundamentals. In terms of data, industrial production, capacity utilization, and the flash manufacturing PMI all missed expectations. The Philly Fed index, initial jobless claims, and current account balance are up for release next.
EUR
Data from the euro zone came in mostly in line with expectations, as some figures even surprised to the upside. France printed a higher than expected manufacturing PMI but its services PMI missed the mark. Meanwhile the euro zone final CPI reading enjoyed an upgrade from 0.1% to 0.2%. The German Ifo business climate index is due today and a rise from 109.0 to 109.2 is eyed.
GBP
The pound was in a weak spot when the UK jobs report came in mostly weaker than expected. Even though the jobless rate dropped to new lows at 5.2%, claimants rose by 3.9K versus 0.9K while the average earnings index fell from 3.0% to 2.4% versus the projected 2.5% reading. Up ahead, the retail sales report is slated to show a 0.6% rebound.
CHF
The franc moved mostly sideways throughout the day as traders waited for the FOMC announcement. Data from Switzerland showed an improvement as the ZEW economic expectations index rose from 0.0 to 16.6. SECO economic forecasts are up for release today.
JPY
The yen continued to give up some of its recent wins when risk appetite returned to the markets. Japan’s flash manufacturing PMI dipped from 52.6 to 52.5, which still indicated an industry expansion. Japan’s trade balance is due today and the BOJ monetary policy statement is lined up for Friday.
Commodity Currencies (AUD, NZD, CAD)
The Loonie chalked up another round of losses when oil prices resumed their slide. US crude oil inventories rose by 4.6 million barrels instead of showing the estimated drop of 0.3 million barrels. Data from Canada was actually better than expected as foreign securities purchases picked up. New Zealand’s GDP came in at 0.9% for Q3, higher than the previous 0.4% growth figure.
To contact the reporter of the story: Samuel Rae at samuel@forexminute.com
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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.