Digest Dec 2015 No6 : (US Interest Rate) After Fed Rate Increase Announcement and Before
Thursday 17 December 2015
US Interest Rate Rise 25bp, Changed Since December 2008
- 2015 completed the last meeting of the US central bank's policy committee (FOMC) decided to raise the benchmark interest rate unchanged for nearly a decade in the range of 0 percent. Announcement that the whole world is dismpaikan awaited by the governor of the Federal Reserve Janet Yellen few hours ago.
- Federal Reserve decided the first rate hike since 2006, which marks the end of the zero interest rate policy of the US central bank. Interest rate increased 25 basis points from 0.25 percent to 0.50 percent. Lastly interest rate of 0.25 percent set in December 2008.
- Janet Yellen reveals the reason the Fed raised the benchmark interest rate, because there has been considerable improvement in labor market conditions and Yellen reasonably confident that inflation will rise in the medium term to their target positions at 2 percent. And henceforth the central bank was likely to raise interest rates again this depends on incoming economic data.
- The expected Fed rate hikes will be gradual again in 2017 to 2018 with the simple volume, and finally in 2019 the Fed to target the benchmark interest rate will reach 3.3 per cent position.
- The Labor Department report last mentioned said non-farm payroll employment jumped 211,000 jobs in November compared with economists' forecasts for a gain of about 190,000 jobs. And the unemployment rate held at a low of more than seven years of 5.0 percent.
Fed Defeated record Reduce Unemployment Rate, Pound Depressed
Pound exchange rate movements which had gained in early trading Asian session was not able to resist the pressure behind the US dollar in mid-European session today (16/12) by sentiment fed rate hike came despite positive sentiment from the data print unemployment rate of achievement.
Britain's unemployment rate fell to its lowest level in more than seven and a half years at the 3 month period ending last October, reinforcing the improvement in the labor market as the Bank of England expect. The unemployment rate fell to 5.2 percent, the lowest since three-month period ending in May 2008, according to the release delivered Office for National Statistics on Wednesday (16/12) in London.
- In terms of the movement of the US dollar index trading this afternoon trying to rise from the weakening observed since the beginning of time waiting trading announcement of changes in interest rates with a few hours longer that expected to be increased after a decade has not changed from the lows.
Pound exchange rate movements in the European session (10:00:35 GMT) moves the weak against the US dollar, having opened weaker at 1.5042 in early trading (0000 GMT), the GBPUSD pair fell 19 pips or 0.1% and the value of the rolling is at 1, 5023.
- And for subsequent trading, analyst ZATco Research Center estimates GBPUSD pair could go down to support level 1.4984 and if that level breaks, then the pair may rise again to a level of 1.5140.
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Only Thin Dollar Up After Fed Rate Increase Announcement
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Forex trading ended the American session, the US dollar exchange rate increased only slightly against the major currencies of the end of the previous trading day. The movement of the dollar index fluctuated throughout the day which ended with a marginal gain position after rising to its highest level in a week after the announcement of Fed rate hikes.
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Federal Reserve decided the first rate hike since 2006, which marks the end of the zero interest rate policy of the US central bank. Interest rate increased 25 basis points from 0.25 percent to 0.50 percent. Lastly interest rate of 0.25 percent set in December 2008.
- The dollar index, which reached a high of more than one week in the position of 98.55 after Fed rate decision, only increased 0.2 percent since the start of trading and finished in 98.42. Against other major rivals, the euro was last down 0.14 percent against the dollar at 1.0914 position, after reaching a low of 1.0888 positions after the Fed decision.
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Against the yen, the dollar ended up just 0.41 percent at ¥ 122.34 after reaching a one-week highs at 122.300 positions after Janet Yellen announcement a few hours ago. With the Swiss franc the dollar declined 0.11 percent at 0.9906 franc positions.
- Technically, Analyst ZATco Resarch Center see the movement of the US dollar index is based on the high price at 98.55 and the low at 98.16, the index is expected to have strong resistance at 98.97 and immediate support 97.44 range.
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Crude Oil Prices Down Almost 5% Distressed US rate hike
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Crude oil prices tumbled nearly 5 percent at the close of trading on Thursday (17/12) after US government data showed an increase in weekly crude oil inventories and the Federal Reserve raised interest rates for the first time in nine years.
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Rate hike signaled the belief that the US economy has been largely overcome the financial crisis of 2007-2009. Higher US interest rates are expected to support the dollar, which weighed on oil prices, makes oil more expensive for holders of other currencies.
- The dollar strengthened after a modest rise in interest rates. Based on the interest rate futures market, traders expect a second interest rate hike in April.
- Oil traders have been worried about the growing global glut of oil that has weighed on prices in recent weeks. Data from the US Energy Information Administration showed crude inventories rose 4.8 million barrels last week. Analysts in a Reuters poll had forecast a 1.4 million barrel decline.
- WTI crude oil prices fell 4.9 percent, or $ 1.83, to 35.52 dollars per barrel, not far from the 32.40 dollars per barrel that occurred during the 2008 financial crisis.
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Brent crude futures contacts January fell $ 1.26, or more than 3 percent, to 37.19 dollars per barrel. While the Brent February contract closed at $ 37.39, down $ 1.34.
- In a preliminary report on Tuesday, industry group American Petroleum Institute (API), has reported a more modest weekly production in US crude inventories of 2.3 million barrels.
- Analyst ZATco Research Center memperkirakan harga minyak masih berpotensi alami tekanan dengan sentimen kelebihan pasokan minyak dunia dan semakin menguatnya dollar dengan kenaikan suku bunga AS. Harga minyak akan bergerak menembus kisaran Support 35,00-34,50, jika harga berbalik menguat akan mencoba menembus kisaran Resistance 36,00-36,50.
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Preview: FOMC Decision (a day before hike)
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The Fed is almost certain to raise interest rates. In all likelihood, the Fed will raise the fed funds rate 25 bp thereby taking the target range be 0:25 to 0:50 per cent. The market is taking into account in determining the price with a very high probability of the increase; Most Fed watchers also expect the same thing, only 3 of the 101 who expect no interest rate hike according to the poll of Bloomberg.
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While the governor Yellen would want a unanimous decision on such an important meeting. Charles Evans of the Chicago Fed is most likely opponents, but because he will not have a voice in 2016/2017 implications for future policy will be minimal. Likewise, Kocherlakota of the Minneapolis Fed in September covet Fed Funds Rate negative, will not be present at the meeting this December and will also be non-voters in 2016. Meanwhile, another Fed governor Tarullo and Brainards leading toward the dovish also and they never become opponents in the past.
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In a press conference, estimated the Governor Yellen will give further dovish message underlined that the gradual nature of the tightening cycle is also quite contrary to the language of "measured pace" and a series of hikes in 2004-2006. Should be said this is a press conference of their dovish.
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Analysis Morgan Stanley Ahead of Fed Rate Increase Decision (a day before hike)
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Today is the day the Fed and how arahdari US dollar is still full of question marks. Here is a view of Morgan Stanley as submitted by eFXnews.
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If it does not happen a tremendous surprise, the FOMC will raise the federal funds rate for the first time in almost a decade.
- Team of the US economy from Morgan Stanley estimates that the FOMC will emphasize gradual message in their statements and press conferences, as well as expectations of three hikes in 2016. Of course, the FOMC will try to avoid an unnecessary tightening of financial conditions through the reaction in FX, stocks and credit. But there are doubts about whether the increase dovish scenario is already reckoned in market prices.
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Thus Morgan Stanley put long positions against the USD ahead of the FOMC meeting this evening (tomorrow early morning).
- However, depending also couple of the USD.
- USD still vulnerable against the EUR, JPY and other non-G10-exchange-based commodity.
- USD long positions especially true for the AUD and CAD in G10 and emerging market-exchange such as TRY and BRL.
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European Stocks Rise Ahead of US Interest Rate Decision Increase (a day before hike)
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European Stocks opened positive on Wednesday (16/12) ahead of rising US interest rates by the US Federal Reserve next morning.
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Pan-European index STOXX 600 rose more than 0.7 percent dibasemua major indexes slightly higher.
- The FTSE 100 is in a position 6067.01, up 49.22 points or 0.82%.
- The DAX is in a position 10524.21, up 73.83 points or 0.71%.
- CAC 40 is in a position 4645.99, up 31.59 points or 0.68%.
- IBEX 35 index is in a position 9794.30, up 82.70 points or 0.85%.
- European markets follow the lead of positive Asian market where the market traded higher on Wednesday, induced rally on Wall Street overnight.
- Analysts believe the rally in the US and Europe showed the market fully in the expected price for the Federal Reserve's interest rate hikes; The Fed's decision is due on Wednesday.
- This will be the first time that the Fed has increased since 2006 but the bank is expected to be very cautious, a rise of 25 basis points this month and only gradually.
- Shares of French retailer, Casino, traded 7 percent higher after announcing a plan to reduce debt. JPMorgan also raised its price target for the stock.
- Registered shares Amsterdam, Altice also rose more than 7 percent after Deutsche Bank raised its outlook for the stock from "hold" to "buy".
- Shares of British publishing and education company Pearson rose sharply after Exane BNP Paribas raised its forecast on the stock.
- Shares of British electronics retailer, Dixons Carphone reported a 23 percent rise in first-half profit that helped propel the stock to the green zone.
- Zodiac Aerospace, which supplies systems and equipment for aircraft, down at the bottom end of the STOXX 600 after JPMorgan cut its target price for the stock.
- The Company reported an increase of 8.8 percent in the first quarter of fiscal year 2015/2016, but said it was behind schedule in supplying toilet for the Airbus A350.
- Shares of Apple Suppliers, Dialog Semiconductor traded sharply lower after it cut its fourth-quarter earnings guidance and received a round of cuts target price of brokers.
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While the luxury sector became a focus for investors on Wednesday after a broker issued a note on the number of shares and Prada reported earnings.
- Prada shares listed in Hong Kong are almost 7 percent lower after luxury goods maker reported a 38 percent drop in quarterly profit, weighed down by a drop in sales in Greater China as economic growth slows.
- British Burberry reversed losses after HSBC cut its target price for the stock. And the fashion house LVMH also turned positive after initially trading lower following news that Raymond James cut its price target for the stock.
- Miners are also the focus of the Anglo American high despite price cuts for the shares of both Deutsche Bank and Societe Generale.
- Glencore also moved higher despite price cuts Deutsche Bank. BHP Billiton rose sharply on reports that the miner is considering further cuts to capital expenditure.
- Analyst ZATco Research Center estimates the European market investors will focus on US rate hike this morning. The increase in US interest rates could raise Wall Street who can influence the strengthening of global stock markets, including the European market.
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US Dollar Managed Strong Back Welcomes Changes in Reference Interest Rate (a day before hike)
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US dollar exchange rate movements are corrected by profit taking in early trading, managed to advance to continue the trend of trade 2 consecutive days prior to mid European session on Wednesday (16/12) ahead of the announcement of changes in the Fed's benchmark rate will be announced tonight.
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In early market trading careful watch on the announcement tonight so do profit-taking by sentiment rising interest rates will be phased so that the night is expected a slight increase. But entering the European session markets ensure positive impacts for tonight's announcement that the market chasing the dollar back.
- After the FOMC meeting for 2 days will be announced by Janet Yellen as the US central bank governors of the new reference rate after a decade not be changed.
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Monitor the strength of the US dollar exchange rate against other currencies on the US dollar index today (11:00:40 GMT) rolling in the range of 98.25, up from 98.16 opening at 0000 GMT.
- Technically, Analyst ZATco Resarch Center see the movement of the US dollar index is based on the high price at 98.28 and the low at 97.17 last night, the index is expected to have resistance in the range of 98.97 and 98.55, while immediate support in the range of 97.44 and 96 , 75.
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Preview: Housing Starts & Building Permits AS
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New applications for building permits rose 4.1% to 1,150,000 a year. Single-family permits increased to their highest level since December 2007. Economists expected the same number. The data show that the overall housing market has improved this year but still below the level before the recession
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A recovery in the housing market stumbled recently. Although home sales are still close to its best level since the recession berakhri in 2009, change from year to year is still a downward trend, into a growth rate of one digit. This is not a terrible, but a warning that the strongest pace of growth in residential construction activity cycle now may have passed
- The prospect of a slow rise in interest rates become a minor issue at this point. Nonetheless residential construction industry remained on top, with figures yesterday from the National Association of Home Builders (NAHB). Housing Market Index (HMI) fell in December, but this sentiment dipenutupan benchmark of 2015 remained near the height in 10 years.
- Kepala ekonom dari NAHB mengatakan, “Selama tujuh bulan yang lalu, level keyakinan pembangun rata-rata berada di bawah angka 60an, yang adalah sesuai dengan pemulihan yang konsisten dan bertahap. Dengan penciptaan pekerjaan, pertumbuhan ekonomi dan bertumbuhnya formasi rumah tangga, kami mengantisipasikan pasar perumahan akan terus mengambil perhatian menjelang 2016”.
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Data tonight regarding construction in November will provide some perspective on NAHB good outlook. The question is whether we will see a rebound from the fall in October that made "housing starts" were in humility for seven months According to the consensus of Econoday.com the answer is yes, there will be a solid jump higher to 1.141 million units. While Forexcrunch estimated in November the number of building permits will rise to 1,160,000.
- If this prediction is correct, "starts" will move closer to the boundary after the recession at 1.211 million units in June last. Conversely, decreases shock that occurred on the day that the Fed may raise interest rates will raise new questions about the NAHB estimates that the housing recovery will be more rapid in recent years.
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European Session Euro Corrected Ignore Positive Manufacturing Data
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Euro exchange rate movements which strengthened from the beginning of trading before correcting the trade trend, turning pressured by the US dollar in mid-European session today (16/12) by the sentiments of rate hikes by the Fed that ignore the sentiments of data flash manufacturing PMI 2 large Euro area countries.
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Data flash PMI manufaktur yang menjadi sentimen positif pair hari ini yaitu data PMI Jerman dan Perancis dilaporkan menunjukkan data yang lebih tinggi dari periode sebelumnya. PMI manufaktur Jerman naik ke 53,0 dari 52,7 sedang Perancis naik ke 51,6 dari 50,6.
- In terms of the movement of the US dollar index trading this afternoon trying to rise from the weakening observed since the beginning of time waiting trading announcement of changes in interest rates with a few hours longer that expected to be increased after a decade has not changed from the lows.
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But technically the euro tried to push back the dollar which Euro exchange rate movements in the European session (11:00:35 GMT) moved down against the US dollar, after a strong opening at 1.0931 in early trading (0000 GMT), the Euro exchange rate was down 3 pips or 0, 01% and the value of the rolling is at 1.0928.
- For further trade until the close of trading American session ends tomorrow morning, analyst ZATco Research Center estimates that the EURUSD pair could fall to 1.0875 support range, but if the dollar fell, the pair can rise back to 1.1120 resistance position.
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Inggris Kembali Cetak Rekor Kurangi Penganggurannya (a day before hike)
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Britain's unemployment rate fell to its lowest level in more than seven and a half years at the 3 month period ending last October, reinforcing the improvement in the labor market as the Bank of England expect. The unemployment rate fell to 5.2 percent, the lowest since three-month period ending in May 2008, according to the release delivered Office for National Statistics on Wednesday (16/12) in London.
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While previously Economists expect the unemployment rate will not change at the level of 5.3 percent. The fall in unemployment is due to the royal country increasing number of recruitment. However, despite an increase in the number of jobs, there is also the weakening of the growth rate of wages.
United Kingdom Unemployment Rate
- In the 3 months there were 1.71 million people unemployed, down 110,000 from the period May -July 2015 and lower 244,000 people from the previous year. Of the 939 000 number of unemployed male unemployment 153,000 lower than a year earlier, the remaining women 774,000 people or 91,000 fewer than the previous year.
- For the amount of work there were 31.30 million people in the period, less 207,000 people for the period from May to July 2015 and 505,000 more than the previous year. Of these, 22.88 million were working full-time or more than 338,000 for the previous year. While part time as many as 8.42 million, more than 167,000 a year earlier. Level workforce the period reached 73.9 percent, which is the highest in history.
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In terms of wages of employees in the country, comparing the period from August to October 2015 with the previous year, the wages of employees in the UK increased 2.4 percent including bonuses and increased 2 percent excluding bonuses.
- Previously reported at the same time, the number of people claiming unemployment benefits rose by 3.9K in November 2015 from 0.2K in October.
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Gold Prices Rise Thin response rate hike US
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Gold prices rose slightly at the close of trading on Thursday morning Asia Zone (17/12), after the US Federal Reserve raised interest rates for the first time in almost a decade.
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The US central bank policy committee raised the benchmark interest rate range by 0.25 percentage points to between 0.25 and 0.50 percent, ending a long debate about whether the economy is strong enough to withstand higher borrowing costs.
- Spot gold prices rose 1% at 1.071.81 dollars per troy ounce. However, compared to the highest position at 1,078.20 dollars per ounce decreased by approximately 1%.
- Daily price of gold rose 1% before the Fed's statement, the price of US gold futures for February delivery closed up 1.4 percent at 1,076.80 dollars per troy ounce.
- The gold price has fallen nearly 10 percent this year, largely on speculation that US interest rates will be raised from the lowest level. In a Reuters poll of more than 90 economists taken between 4 to 9 December, the probability that the Fed will raise interest rates increased to 90 percent.
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Investors scaled back positions in gold ahead of the Fed meeting. Holdings of exchange-traded gold-backed funds in the world, which is listed on the New York, SPDR Gold Trust, at their lowest level since September 2008.
- Meanwhile, silver prices rose 3 percent to $ 14.16 per ounce, after falling to its lowest level in more than six years this week at $ 13.60. while Platinum prices rose 1.7 percent at $ 869.75 an ounce and palladium prices were up 0.5 percent at $ 567.50 per ounce.
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