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Markets await FOMC Meeting

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The U.S. dollar rose to a new 14-year high in 2017's first full day, after data showed that U.S. factory activity accelerated to a two-year high in December and construction spending rose last November as well. In addition, the Greenback was positively affected by the U.S. manufacturing index, as new orders and production touched a positive sign for U.S. economic growth.

The U.S. dollar index hit 103.80, the highest level since December 2002, before rebounding to $103.20.

Markets are awaiting the FOMC Meeting Minutes results, which have seen rate hikes. In addition, the Fed might mention the strength of the US economy.

Gold held its gains despite pressure from a strong USD. The precious metal got a boost after Trump sent out a threat to tax General Motors for manufacturing abroad. Later on, Ford cancelled plans to build a new $1.6 billion factory in Mexico and shifted it to Michigan. Such threats could send a negative message to investors on freedom of trade, so they could shift to gold as a safe haven.

However technically, the precious metal is unlikely to trade above $1,160 during the next period.

Euro failed to hold above its gains and declined to $1.04, however, the German inflation index hit the highest level in more than three years, which reduces the pressure on the ECB. In this regard, ECB extended its asset purchase programme until the end of the year.

Euro is awaiting an important release, which is the Eurozone inflation figures, as good figures could help the common currency to re-test $1.05.

Oil prices failed to maintain their gains, amid fears of a lack of success of the agreement on the elimination of oversupply.

The most important economic events:

  • EUR Euro-Zone Consumer Price Index Estimate (YoY) (DEC): (GMT 12:00) – important – Forecast (1.0%) – Previous (0.6%).
  • EUR Euro-Zone Consumer Price Index - Core (YoY) (DEC A): (GMT 12:00) – important – Forecast (0.8%) – Previous (0.8%).

Disclaimer
The prices and news mentioned in this outlook are absolutely no guarantee of future market performance and do not represent the view of ICM Capital Limited. Financial markets can move in either direction causing profits to be made or complete losses to be incurred by the trader. Each trader must decide for themselves what their risk appetite is and ensure that correct risk management procedures are in place before placing any trades.

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