FOMC time and what to expect – 14 Dec 2016

FOMC time and what to expect – 14 Dec 2016


The basic question for today is whether Fed hikes and whether it gives a higher future projections for inflation and growth without causing a further skyrocket for USD and a sharp fall for emerging markets.

Fed will hike today with the desire to cause less market volatility and we think it will achieve it. Today’s hike by 25 basis points has largely anticipated by markets.

Traders should focus more on Fed’s projections, dots and of course to the dovish or hawkish tone that Yellen will give during the press conference.

We think that today Yellen and Fed will try to keep the balances intact specifically after the big criticism which received from Donald Trump.

Many economists expect that the Fed will hike rates three times in 2017 however we see this scenario very optimistic particularly if inflation do not move higher.

Daily Key points:

• Fed fund futures currently put the odds of a hike at this meeting at 100%,
• 20 economists surveyed in the latest Reuters’ poll agreed that the U.S. central bank would opt to tighten policy
• economists on average expected the Fed to hike rates three times in 2017

Daily Economic calendar:
Country Event Importance Previous Expectations Follow Times
France French Final CPI m/m Medium 0.0 0.0 Euro 10:45
UK Average Earnings Index 3m/y High 2.3 2.3 GBP 12:30
UK Claimant Count Change High 9.8K 9.8K GBP 12:30
UK BOE Gov Carney Speaks High n/a n/a GBP 15:15
USA BOE Gov Carney Speaks High 0.8 0.4 USD 16:30
USA Industrial Production m/m High 0.0 -0.2 USD 17:15
OIL Crude Oil Inventories High -2.4M -1.4M OIL 18:30
USA FOMC Economic Projections MUST n/a n/a All indices 22:00
USA FOMC Statement MUST n/a n/a All indices 22:00