Market Overview

13 November 2015

WEEKLY REVIEW: This week’s U.S. economic data raised doubts over the Fed’s interest rate hike in December

Today's U.S. economic data showed that the U.S. economic recovery remains uneven. This week's U.S. economic data was weaker than expected. Retails sales rose slightly in October, while producer prices continued to decline.

Comments by Fed officials were mixed. St. Louis Fed President James Bullard said in a speech on Thursday that the Fed should start raising its interest rate as the Fed's targets are reached. Chicago Fed President Charles Evans said in a speech on Thursday that he wants to be confident that inflation begins to pick up toward the Fed's target before to start raising interest rates. The Fed Vice Chairman Stanley Fischer said on Thursday that the interest rate hike in December is possible, but it will depend on the incoming inflation and employment data.

It is clear that the incoming U.S. economic data will be very important for the Fed's decision.

The European Central Bank (ECB) is likely to expand its quantitative easing. ECB officials often mentioned a deposit rate cut. It's likely that the central bank will lower its deposit rate. The deposit rate is -0.2%.

The foreign exchange market is likely to remain volatile as market participants will continue to look for further clues for the Fed's and ECB' monetary policy.

It is likely that the currency pair EURUSD will test the high of November 12 at $1.0830 or the level at $1.0896, if the U.S. economic data will negative and there will be no negative news from the Eurozone.

If the U.S. economic data is positive and in case of the negative news from the Eurozone, the currency pair EURUSD may test the low of November 10 at $1.073 or the low of April 21 at 1.0659 or the low of April 14 at 1.0531.

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