Daily Analysis | 31 January 2018
No change is expected in the policy rate at the upcoming 30-31 January FOMC meeting. The market has priced in the probability to remain on hold currently at 95.0% according to Feds Funds Futures Focus to shift to accompanying the statement. We expect an upbeat assessment of the economy despite the drop of the GDP. We expect a more hawkish tone of the statement in order to accommodate a possible rate hike in March. Overall the US Dollar could strengthen especially should the tone support the forward guidance of three rate hikes in 2018. Finally, please note that this will be Chair Janet Yellen’s last FOMC meeting.
- Support: 1.2355(S1), 1.2230(S2), 1.2100(S3)
- Resistance: 1.2495(R1), 1.2600(R2), 1.2770(R3)
Is Brexit going to hurt the UK economy?
A report prepared by the UK government showing that the UK economy will be hit in any Brexit scenario leaked yesterday. Government ministers tried to play down the importance of the report, however, media persisted on the issue. The issue seems to be confirmed as U.K. banks may have limited access to the EU single market after Brexit. On the inner political front, Theresa May may be facing a small rebellion within the Tory party. 48 votes are required to trigger a leadership contest within the Tory party. These should not be good news about the GBP, and should the negative headlines continue, the GBP could be weakened.
- Support: 1.4040(S1), 1.3875(S2), 1.3785(S3)
- Resistance: 1.4175(R1), 1.4325(R2), 1.4460(R3)
Today’s other economic highlights:
France: Preliminary CPI (EU) for January, Survey:+1.0% YoY Prior:+1.2% YoY 07:45(GMT), neutral to negative for EUR.
Germany: Unemployment for January, Survey:+5.4% Prior:+5.5% 09:00(GMT), neutral to positive for EUR.
Eurozone: Inflation Preliminary January, Survey:+1.3% YoY Prior:+1.4% YoY 10:00 (GMT), negative for the EUR.
Eurozone: Unemployment rate for December, Survey: 8.7% Prior: 8.7% 10:00 (GMT), neutral to positive for EUR.
Canada: GDP for November, Survey:+0.4% MoM Prior: 0.0% 13:30(GMT), positive for CAD.
US: ADP National employment for January, Survey:185k Prior:250K, 13:30(GMT), positive for USD.
US: Crude Oil Inventories, Survey:+0.100M Prior:-1.071M, 15:30 (GMT), negative for WTI.
US: Federal Funds Rate Survey: 1.50% Prior:1.50% 19:00 (GMT), Positive for USD.
Speakers: Riksbank Governor Ingves speaks
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