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Fed meeting today

EUR/GBP – 4hr Candlesticks
Source: GKFX / MT4 (December 16, 2020)

EUR/GBP is testing a rising trendline after forming a potential head and shoulders bearish reversal pattern. A break below the trendline would confirm the bearish pattern, which would be additionally confirmed by a move below the 0.90 round number.
 

TAKEAWAYS


•    S&P 500 snaps 4-day losing streak
•    Apple jumps 5% on reports of a 30% increase in iPhone production
•    House and Senate leaders meet on Tuesday to discuss covid stimulus
•    Gold pops back over $1850 per oz, Dollar drifts near 2-year lows
•    PREVIEW: Federal Reserve interest rate policy meeting
•    DAY AHEAD: UK CPI, Fed meeting. PMIs
 

GURU WISDOM


“You can never plan the future by the past.” —Edmund Burke
 

MARKETS


*Daily closing price
↗ EUR/USD    1.2153        (+0.08%)
↗ GBP/USD    1.3456        (+1.01%)
↘ USD/JPY    103.68        (-0.33%)
↗ S&P 500    3694.62    (+1.29%)
↘ Hang Seng    26,567        (-0.69%)
↗ Gold        1853.47    (+1.44%)
↗ Oil (Brent)    50.70        (+0.82%)
↗ Bitcoin    19,478        (+1.02%)
 

NEWS

More iPhones


Apple stock jumped 5% on Tuesday, leading the S&P 500 to snap a 4-day losing streak after it was reported that the company would ship 30% more iPhones next year. Apple is forecasting strong demand and less supply chain disruption in 2021 after the pandemic. The stock price has been bid up this year, partly on hopes that new 5G-enabled phones will shorten the length of time between phone upgrades and kick of a new Smartphone ‘supercycle.’ 
 

Stimulus ON

The stimulus on/off news flow has been raging for months but with Joe Biden officially confirmed by the Electoral College yesterday, investors are turning optimistic that a compromise can finally found between Democrats and Republicans on a stimulus deal. Any deal will involve more debt issuance and likely more money-printing to sustain it, which is underpinning gold as a hedge against inflation. 
 

Fed Preview


Forecasters are split on whether the Fed will simply offer dovish guidance or increase the duration of the bonds it is buying as a slight tweak to its bond-buying program. Increasing the duration means buying longer-dated bonds like 10 and 30-year bonds, which would help keep mortgage rates low. An outlier scenario would be for the Fed to expand the size of its program from $80 billion to perhaps $100 trillion. Any policy change would be dovish and likely be negative for the dollar. However the Fed will also make economic forecasts and could lift its longer term forecasts thanks to the availability of a vaccine, raising fears of a sooner than expected rate hike- possibly prompting a dollar-positive reaction.
 

DAY AHEAD 


*Times in GMT
07:00      GBP        CPI (YoY) (Nov)             0.6%        0.7%
09:00      EUR        Markit Composite PMI (Dec)       45.8        45.3
09:30      GBP        Services PMI                        47.6
13:30      USD        Retail Sales (MoM) (Nov)     -0.3%        0.3%
13:30      CAD        CPI (YoY) (Nov)             0.8%        0.7%
14:45      USD        Services PMI (Dec)           55.9        58.4    
15:30      USD        Crude Oil Inventories         -1.937M    15.189M
19:00      USD        Fed Interest Rate Decision     0.25%        0.25%
21:45      NZD        GDP (YoY) (Q3)             -1.3%        -12.4%    
 

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