Fed enacts ‘Turbo taper’

It takes 20 years to build a reputation and 5 minutes to ruin it. If you think about that, you’ll do things differently. - Warren Buffett

 

 

 

HEADLINES

 

 

 

• Fed signals three rate hikes coming in 2022 as inflation battle begins
• USD/JPY breaks above 114.00 as Fed policymakers eye three-rate hikes
• UK inflation jumps above 5% as BoE considers rate rise
• Gold Extends Drop as Fed Projects Faster Taper Pace, Rate Hikes
• Oil Drifts as Omicron Worry Triumphs U.S. Drawdowns
• World shares turn positive after Fed tapering announcement
• WTI could dive below the $60 mark in 2022 – Deutsche Bank

 

 

FOREX

 

 

Fed signals three rate hikes coming in 2022 as inflation battle begins

 

 The Federal Reserve, signaling its inflation target has been met, said on Wednesday it would end its pandemic-era bond purchases in March and pave the way for three quarter-percentage-point interest rate hikes by the end of 2022 as it exits from policies enacted at the start of the health crisis.

 

USD/JPY breaks above 114.00 as Fed policymakers eye three-rate hikes

 

The USD/JPY reclaims the 114.00 figure as the Fed decided to keep rates at the 0 to 0.25% range while increasing the bond-taper speed. Additionally, according to the dot-plot, the median estimates at least three hikes in 2022, in line with market expectations. According to the Summary of Economic Projections (SEP), the Federal Reserve Board members, the median view of the Federal Fund Rates in 2022 is at 0.9%, in 2023 at 1.6%, and by 2024 at 2.1%.

 

UK inflation jumps above 5% as BoE considers rate rise

 

British inflation surged to its highest in more than 10 years in November, jumping to 5.1% and potentially unsettling the Bank of England a day before it announces whether it is raising interest rates for the first time since COVID-19 struck.

 

 

COMMODITIES

 

 

Gold Extends Drop as Fed Projects Faster Taper Pace, Rate Hikes

 

Gold extended declines after Federal Reserve officials shifted to an earlier end of their asset-buying program and signaled they favor raising interest rates in 2022 at a faster pace than economists were expecting.

Heralding one of the most hawkish policy pivots in years, the central bank said Wednesday it will double the pace at which it’s scaling back purchases of Treasuries and mortgage-backed securities to $30 billion a month, putting it on track to conclude the program in early 2022, rather than mid-year as initially planned.

 

Oil Drifts as Omicron Worry Triumphs U.S. Drawdowns

 

Even the biggest crude stockpile drop in three months can’t seem to shake off rising worries about the Omicron.

U.S. crude prices rose Wednesday but fell short of their full potential despite the largest weekly inventory drop in three months reported by the Energy Information Administration. Reason: Renewed concerns about the latest know variant of the coronavirus.

 

 

STOCKS

 

 

World shares turn positive after Fed tapering announcement

 

Global shares rose slightly on Wednesday after the U.S. Federal Reserve said it would end its pandemic-era bond purchases in March.

 

 

ANALYSIS

 

 

WTI could dive below the $60 mark in 2022 – Deutsche Bank

 

“We forecast WTI falling and potentially breaking $60/barrel next year on the back of a material rise in oil surpluses.”

“In supply, OPEC is set to add at least 2.1 mmb/d, slightly more than non-OPEC supply addition of +1.9 mmb/d dominated by the US (+900 kb/d) and the Former Soviet Union (+400 kb/d), all in Q4-22 over Q4-21 terms.”

“On the demand side, we forecast healthy growth (+3.4 mmb/d YoY) with oil demand back to pre-Covid 2019 levels by the end of next year, but we see downside risks, especially to jet fuel demand, on the back of new variant risks.”

 

 

 

CHART

 

 

Euro / US dollar – 4-Hour Candlesticks

Source: GKFX Prime Metatrader 4

EUR/USD formed a bullish engulfing candlestick pattern on the 4-hour chart after testing support at  1.1235 for a third time. A break above the downtrend line could suggest a trend reversal. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

 

SOURCE

 

 

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/wti-could-dive-below-the-60-mark-in-2022-deutsche-bank-202112151521
https://www.fxstreet.com/news/usd-jpy-breaks-above-11400-as-fed-policymakers-eye-three-rate-hikes-202112152006
https://www.reuters.com/markets/us/fed-prepares-stiffen-inflation-response-post-transitory-world-2021-12-15/
https://www.reuters.com/world/uk/uk-inflation-jumps-10-year-high-51-2021-12-15/
https://www.bloomberg.com/news/articles/2021-12-15/gold-extends-drop-as-fed-projects-faster-taper-pace-rate-hikes