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KTA Macro Weekly Wrap 15/12/17

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 Louise Griffin, Relationship Development Manager at Knightsbridge Trading Academy

 Friday, December 15, 2017

In the G10 currencies this week, NZD and AUD were the top gainers, up 2.61 and 2.03% versus USD, respectively. The top loser was GBP at -1.11% versus the dollar. AUD was buoyed by strong domestic data while NZD jumped after the RBNZ announcement of the new Governor Adrian Orr who is seen as market-friendly given that he is the CEO of NZD wealth fund. USD also fell post dovish Fed minutes as no changes were made to the median dot plot or economic projections. The investors expected some revision in growth and inflation projections considering the fiscal impact, however, they were disappointed. Elsewhere, the BoE kept the bank rates unchanged at 0.5% unanimously in a 9/0 vote. GBP fell slightly but we expect little change to the outlook given the there were no hawkish remarks. The market will now focus on Brexit headlines; however, there is no real catalyst for a move either side before the New Year. The ECB press conference was also on the dovish side with President Draghi still suggesting that low inflation is an issue. We may now see EURUSD test 1.1725-50 area; however, we don't expect any sharp moves beyond it. In the equities space this week, the Nikkei 225 has closed -1.13% at 22553.22 and the European equity markets is also looking to end the week in red. As for US equities, we see a continued rise with the S&P 500 and Dow Jones trading +0.82% and 1.33% for the week. In the rates market, the US and German 10-year yields have both fallen this week with the Bund yield down 1bp to 0.30% and US 10-year yields down 2bp to 2.36%. In the energy space, the oil prices have risen and fallen to end the week almost flat. Looking ahead, there is not much data next week and focus will likely remain on political news from Brexit and US tax reform.


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