Daily Market Analysis – 17th June, 2015
By FxGrow Research & Analysis Team
Global Investors await FOMC rate decision
Globally investors are awaiting the outcome of the Federal Open Market Committee's two day meeting at 18:00hrs GMT which is expected to create high volatility in the markets.
Analysts expect that Federal Reserve policy makers will raise interest rates in September this year. Market is pricing in a 67% probability of the Fed hiking rates before its December policy meeting.
“We expect Fed Chairwoman Janet Yellen to make it clear that the first rate hike is not far off” - Ian Shepherdson, Pantheon Macroeconomics.
“They think the economy is doing fine, and the majority on the Fed now favors starting rate hikes soon and going slowly" - James Glassman, J.P. Morgan Chase.
The FOMC is unlikely to change policy in its June meeting, but the statement and comments by Fed Chairwoman Janet Yellen in the news conference will be very important.
“This market has been and still is a Fed-driven market and it is fan of clear guidance. If Janet Yellen hints whether the Fed will raise in September or December it would be ultimately good for the markets, even though the very short-term reaction will almost certainly be negative” - Michael Antonelli, R.W Baird & Co.
“The Fed has to start normalizing rates, but there is never a perfect time to do it. The market will adjust to the rate hike cycle if it accepts that the economy is growing and that the Fed will indeed be “gradual” as it moves towards higher rate” - Quincy Krosby, Prudential Financial.
Greece is running out of time to secure bailout funds and avoid a possible default. The Greek government must reach a deal with its European creditors soon or risk an exit from the Eurozone.
The probability of a Greek default is at 75% to 80% according to market strategists, with the chances that Greece will secure a last minute deal are at 50%.
In Germany Investor confidence declined for the month of June. The ZEW Economic Sentiment Index dropped to 31.5 amid concerns over the Greek debt default.
In UK Inflation turned positive for the month of May. UK inflation edged higher 0.2%, according to the Office for National Statistics.
In Japan trade deficit increased in May, while imports declined. Trade deficit was 216.0 billion yen in May, while Imports declined by 8.7% to 5.956 trillion yen.
In New Zealand current account deficit decreased to NZ$1.8 billion in the first quarter of 2015.
Crude Oil is trading higher at $61.11 mainly driven by the huge decline in US crude stockpile.
Gold is trading lower in the Europe at 1178.92 ahead of the FOMC statement, while Silver is weak at 15.97
17th June 2015 – 08:54hrs GMT
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Note: This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Investors should, before acting on this information, consider the appropriateness of this information having regard to their personal objectives, financial situation or needs. We recommend investors obtain investment advice specific to their situation before making any financial investment decision.