Market Overview

15 May 2015

The first interest rate hike by the Fed is not yet in sight

Despite comments by the Fed officials that the central bank may raise its interest rate hike in every monetary policy meeting, it is unlikely that it will happen in June. The most U.S. economic data remained soft in April. The U.S. retail sales were flat in April, missing expectations for a 0.2% increase, after a 1.1% gain in March. The U.S. industrial production dropped 0.3% in April, missing expectations for a 0.1% increase, after a 0.3% decline in March. Capacity utilisation rate fell to 78.2% in April from 78.6% in March. The Thomson Reuters/University of Michigan preliminary consumer sentiment index dropped to 88.6 in May from a final reading of 95.9 in April, missing expectations for an increase to 96.0. It was the lowest level since October 2014.

Only the U.S. labour market bounced back in April. The U.S. economy added 223,000 jobs in April, missing expectations for a rise of 224,000 jobs, after a gain of 85,000 jobs in March. The U.S. unemployment rate fell to 5.4% in April from 5.5% in March, in line with expectations.

If the U.S. economic data remains in the coming months, I think that there will be no interest rate hike by the Fed this year.

The weak U.S. economic data supports the euro as investors seems to ignore the Greek debt problem. The euro will test the level $1.1500 in the coming days. The deal between Greece and its creditors could lead that the euro will climb above $1.1500.

Material posted here is solely for information purposes and reliance on this may lead to losses. Past performances are not a reliable indicator of future results. Please read our full disclaimer.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 76% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.