Market participants expect the Fed's monetary policy meeting next week. It is likely that the Fed will start raising its interest rate this month. Fed officials already hinted the possible interest rate hike. The U.S. labour market continued to strengthen, but the manufacturing sector remained weak and inflation remains low.
Today's U.S. economic data is likely to convince the Fed to start raising its interest rates. The producer price index decreased 1.1% year-on-year in November, beating forecasts of a 1.4% decline, after a 1.6% fall in October. The producer price index excluding food and energy climbed 0.5% year-on-year in November, beating forecasts of a 0.2% increase, after a 0.1% rise in October.
The U.S. retail sales climbed 0.2% in November, missing expectations for a 0.3% increase, after a 0.1% gain in October. Retail sales excluding automobiles increased 0.4% in November, beating forecasts of a 0.3% gain, after a 0.1% rise in October.
The U.S. consumer price index (CPI) data for November will be released next Tuesday, ahead of the release of the Fed's meeting results on Wednesday. But the CPI is not the Fed's preferable inflation measure.
It is likely that markets participants will be cautious ahead the release of the Fed's meeting results. Markets are likely to trade sideways.
The impact of the Fed's interest rate hike could be moderate or even negative for the U.S. dollar. The U.S. dollar rose against other currencies in the last months on speculation that the Fed will start raising its interest rate this year. It might apply the following motto: trade the rumour, buy the fact.
The Fed should convince market participants that it is ready to continue to raise its interest rate once it starts hiking its interest rate. If the tone of the Fed's statement is dovish, the U.S. dollar will be likely under pressure.
It is likely that the currency pair EURUSD will rise toward the resistance level at $1.1200 or at $1.1300, if the Fed will not hike its interest rate or it will hike its interest rate but the Fed's statement is dovish, and there will be no negative news from the Eurozone.
If the Fed hike its interest rate but the Fed's statement is hawkish (strong signals for further interest rate hikes), and in case of the negative news from the Eurozone, the currency pair EURUSD may test the level at 1.0800 or the level at $1.0700.
Risk Warning: Trading Forex and CFDs on margin carries a high level of risk and may not be suitable for all investors. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69.66% 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. Prior to trading, you should take into consideration your level of experience and financial situation. TeleTrade strives to provide you with all the necessary information and protective measures, but, if the risks seem still unclear to you, please seek independent advice.
© 2011-2023 TeleTrade-DJ International Consulting Ltd
This website is operated by Teletrade-DJ International Consulting Ltd, which is registered as a Cyprus Investment Firm (CIF) under registration number HE272810 and is licensed by the Cyprus Securities and Exchange Commission (CySEC) under license number 158/11. Teletrade-DJ International Consulting Ltd is located at 88, Arch. Makarios Avenue, 2nd floor, Nicosia Cyprus.
The company operates in accordance with the Markets in Financial Instruments Directive (MiFID).
The content on this website is for information purposes only. All the services and information provided have been obtained from sources deemed to be reliable. Teletrade-DJ International Consulting Ltd ("TeleTrade") and/or any third-party information providers provide the services and information without warranty of any kind. By using this information and services you agree that under no circumstances shall TeleTrade have any liability to any person or entity for any loss or damage in whole or part caused by reliance on such information and services.
TeleTrade cooperates exclusively with regulated financial institutions for the safekeeping of clients' funds. Please see the entire list of banks and payment service providers entrusted with the handling of clients' funds.
Teletrade-DJ International Consulting Ltd currently provides its services on a cross-border basis, within EEA states (except Belgium) under the MiFID passporting regime, and in selected 3rd countries. TeleTrade does not provide its services to residents or nationals of the USA.
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.CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69.66% 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.