FED minutes indicate U.S. rates could rise quicker than expected – Binary Options Daily Review

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Thursday 5th January 2017
Prepared by Barry Jenkins, MarketsWorld Binary Options Analyst

 
Market Index Closing Level Move on day Intraday Market Range
CAC 4,899.40 + 0.07 4,879.23 – 4,913.94
DAX 11,584.31 + 0.07 11,531.40 – 11,616.10
Dow Jones 19,942.16 + 60.40 19,878.80 – 19,956.10
FTSE 7,189.74 + 11.85 7,168.77 – 7,189.74
IBEX 9,462.90 – 31.80 9,424.10 – 9,538.40

Closing Markets Summary

Dow Jones

Stocks in the US closed higher on Wednesday as the latest Federal Reserve meeting showed that policy makers expected a faster pace of rate hikes in 2017. Most Fed officials indicated that upside risks to their growth forecasts had increased as a result of prospects for “more expansionary fiscal policies in coming years.” A strong showing in auto sales also boosted sentiment. The Federal Reserve indicated that interest-rate hikes may come at a faster pace than expected, according to minutes from the Federal Open Market Committee’s December meeting. Companies that featured included auto makers with General Motors up 5.5% after December car sales rose 10%. Rival Ford Motor Company rose 4.6%. Weight Watchers International Inc. rose21% after the weight-loss company said it program was ranked number 1 in several categories of a US News & World Report list of diets. Agile Therapeutics Inc. plunged 47% after the women’s health company late Tuesday reported positive results in a study of its Twirla contraceptive patch, but said 51.4% of participants had to discontinue the study. Tesla Motors Inc. rose 4.6%, even as the electric car maker late Tuesday reported on production challenges in the fourth quarter. Start-up Faraday Future unveiled an all-electric rival to Tesla’s range at the CES technology trade show on Tuesday. Amazon.com Inc. rose 0.5% after the retailer said deliveries for third-party sellers rose 50% during the holiday season. The Dow Jones closed up 60.40 points at 19,942.16. The S&P 500 closed up 12.92 points at 2,270.75 and the Nasdaq Composite closed up 47.92 points at 5,477.01.

Europe

European equity markets closed mainly lower on Wednesday as major retailers fell following downbeat forecasts and drugmakers which were lower after broker downgrades. The Pan-European Stoxx Europe 600 index closed down 0.1% at 365.26. Economic data showed that inflation in the Eurozone jumped to 1.1% in December, reaching its highest level since September 2013 and beating analyst forecasts of a 1% reading. The Eurozone economy expanded at its fastest pace since May 2011, according to the final composite PMI for December from Markit. The index rose to 54.4 from 53.9 in November, coming in higher than the 53.9 flash estimate. Consumer confidence in France was flat in December. Companies that featured included UK fashion retailer Next which dropped 14% after it warned of a challenging 2017 as the fallout from the UK’s Brexit vote starts to bite. The stock had also fallen on Tuesday after Deutsche Bank downgraded the stock to hold from buy. The fall weighed on other retailers with Swedish fashion retailer Hennes & Mauritz AB down 1.9%. Credit Suisse Group AG rose 3.5% after Barclays lifted the bank to overweight from equal-weight. Barclays also lifted the price targets on UBS Group AG and Deutsche Bank. Ryanair Holdings PLC rose 3.3% after the low-cost airline said traffic climbed 20% in December. Novo Nordisk AS dropped 1% after J.P. Morgan Cazenove cut the insulin maker to underweight from neutral. The bank also cut Novartis AG to neutral from overweight, Novartis was also weighed by news that its key oncology executive Alessandro Riva will depart for Gilead Sciences Inc. On regional markets the CAC closed up 0.7 of a points at 4,899.40, the DAX closed up 0.7 of a point at 11,584.31 and the IBEX closed down 31.80 points at 9,462.90.

FTSE

The FTSE ended the session slightly higher on Wednesday after a flat day of trading as a rally in house builders offset a fall in retail shares. Economic data showed that the Markit/CIPS PMI on UK construction activity came in at 54.2 for December, ahead of forecasts of 52.5 and up from November’s 52.8. The Bank of England reported that November mortgage approvals rose to 67,505 from 67,371 in October, short of the 68,500 expected by economists. The Bank reported that consumer credit rose by £1.9bn over the month to push the annual growth rate up to 10.8%, exceeding the £1.6bn average of the previous six months which was also the consensus prediction and the highest level in 11 years. Companies that featured included house builders which were on the front foot following an upbeat note by Deutsche Bank and data showing a pick-up in UK construction sector output in December, with Barratt Developments, Persimmon and Taylor Wimpey all stronger. Retailers were lower, dragged down by Next after it downgraded its full-year profit guidance and warned of another challenging year ahead as sales over the key Christmas period slipped 0.4% on last year. Management’s central profit guidance for the full-year has been cut to £792m from the previous £785-825m range where the central point was £805m. Other retailers including Marks & Spencer, Primark owner Associated British Foods, Debenhams and Dixons Carphone were all lower. The FTSE closed up 11.85 points at 7,189.74.

Economic News Expected Today

 USA

Type Period Forecast Importance
Challenger Job Cuts Dec   26.9K; -13.0% y/y Low
ADP Nonfarm Employment Change Dec 170K 216K High
Continuing Jobless Claims Jan 2,051K 2,102K Low
Initial Jobless Claims Jan 260K 265K Medium
Jobless Claims 4 Week Avg Jan   263.00K Low
Markit Composite PMI Dec   53.7 Medium
Services PMI Dec 53.4 53.4 Medium
Bloomberg Consumer Confidence Jan   46.0 Low
ISM Non-Manufacturing PMI Dec 56.6 57.2 High
Crude Oil Inventories Jan -1.715M 0.614M High

Economic News Expected Today

EU  Eurozone

Type Period Forecast Previous Importance
PPI (Eurozone) Nov 0.3% m/m; 0.1% y/y 0.8% m/m; -0.4% y/y Low
ECB Publishes Account of Monetary Policy Meeting Jan     Medium

Economic News Expected Today

UK United Kingdom

Type Period Forecast Previous Importance
Services PMI Dec 54.7 55.2 High

Other Global Economic Data Expected

 

Type Period Forecast Previous Importance
Caixin Services PMI (China) Dec 53.3 53.1 Medium
CPI (Switzerland) Dec -0.1% m/m; 0.0% y/y -0.2% m/m; -0.3% y/y Medium
RMPI (Canada) Nov -1.5% m/m 3.3% m/m; 1.5% y/y Medium

Economic News Round Up MarketsWorld Bars

Applications for US mortgages stabilized at the end of 2016 from their recent drop as borrowing costs on home loans eased from their highest levels in more than two years, The Mortgage Bankers Association reported that its measure on requests for mortgages edged up to 358.5 in the week ended Dec. 30th, 0.1 percent higher than the prior week. Eurozone service sector activity rose in the last quarter, markit reported that the Eurozone services PMI rose to 53.7, from 53.1 in the previous quarter.

The Eurozone services PMI forecast to remain unchanged at 53.1 in the last quarter. Consumer price inflation in the Eurozone rose more than forecast last month, Eurostat reported that Eurozone CPI rose to a seasonally adjusted annual rate of 1.1%, from 0.6% in the previous month. The Eurozone CPI was forecast to rise to 1.0% last month.

German service sector activity rose last month, Markit reported that the German services PMI rose to 54.3, from 53.8 in the previous month. The German services PMI was forecast to remain unchanged at 53.8 last month.

French service sector activity rose last month, Markit reported that the French services PMI rose to a seasonally adjusted 52.9, from 52.6 in the previous month. The French services PMI was forecast to remain unchanged at 52.6 last month.

Service sector activity in Spain fell less than forecast last month, Markit reported that the Spanish services PMI fell to a seasonally adjusted 55.0, from 55.1 in the previous month. The Spanish services PMI was forecast to fall to 54.8 last month.

UK construction sector activity in December came in ahead of forecasts as new order growth hit an 11-month high, but cost pressures remained elevated. Markit and the Chartered Institute of Purchasing & Supply (CIPS) reported that their UK construction purchasing managers’ index rose to a seasonally adjusted 54.2 last month from November’s reading of 52.8. Forecasts were for the index to remain steady at 52.8 in December. The amount of new credit issued to consumers by the Bank of England rose last month, the Bank of England reported that UK net lending rose to 5.1B, from 4.9B in the previous month. UK net lending was forecast to remain unchanged at 4.9B last month.

Manufacturing activity in Japan expanded at the fastest pace in a year in December, the Final Markit/Nikkei Japan Manufacturing PMI rose to 52.4 in December on a seasonally adjusted basis, higher than a preliminary reading of 51.9 and a final 51.3 in November.

Forex Round Up MarketsWorld Bars

The Dollar edged down from a 14-year high against other major currencies on Wednesday, with investors looked for fresh clues on the US economy and the timing of interest rate rises. The euro was higher, boosted by data showing Eurozone prices rose faster than expected in December and surveys suggesting business growth reached its highest in more than five years. Eurozone CPI rose to a seasonally adjusted annual rate of 1.1%, from 0.6% in the previous month. The Eurozone CPI was forecast to rise to 1.0% last month. The EUR/USD was up 0.56% at $1.0464.

The Dollar was lower against the Yen, with the USD/JPY down 0.38% to ¥117.30, off Tuesday’s three-week highs of ¥118.6. The Pound was higher with the GBP/USD up 0.46% at $1.2296, recovering from a two-month low of $1.2197 struck overnight. The Canadian dollar rose to the highest levels in three-weeks against the Dollar with the USD/CAD down 1.00% at CAD$1.3293 after falling as low as CAD$1.3300 earlier. The AUD/USD was up 0.82% at $0.7278. The US Dollar Index was down 0.6% at 102.60.

 
Commodity Round Up MarketsWorld Bars

Gold futures touched a nearly four-week high Wednesday on short covering as the US dollar eased, but trading was cautious ahead Federal Reserve minutes. February gold was $4.40 higher to $1,166.40 per ounce. March silver was up $0.091 at $16.50.

Crude oil futures finished higher on Wednesday as signs are that the major oil producers are sticking to their pledge to cut output and bets that US crude supplies fell for the first time in three weeks helping prices recoup most of the prior day’s drop. February West Texas Intermediate crude rose $0.93 to settle at $53.26 per barrel. March Brent rose $0.99 to settle at $56.46 per barrel.

The MarketsWorld Overview MarketsWorld Bars

Services sector activity in the US rose to a one-year high in November with the ISM non-manufacturing PMI rising to 57.2 from 54.8 in October. Services industries reported a 4 percentage point surge in production with employment soaring 5.1% to a 13-month high. The services sector strong performance data indicates that consumers are spending and the economy maintained its momentum in the July-September quarter enabling the Fed to make the rate hike decision at their December meeting. The US service sector is forecast to remain in expansion with 56.6 points in December.

Monitor the Dollar for Binary Options trading.

 

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The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Any opinion offered herein reflects Barry Jenkins’ (MarketsWorld Analyst) current judgment and may change without notice. Users acknowledge and agree to the fact that, by its very nature, any investment in shares, stock options and similar and assimilated products is characterized by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable. This message is intended for recipient only and not for further distribution without the consent of MarketsWorld.

 

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