HiFX Morning Update, December 15, 2017

HiFX Morning Update, December 15, 2017

The NZDUSD opens at 0.7005 (mid-rate) this morning.

Although the NZD rallied initially after the U.S. Fed hiked rates 0.25% to 1.5% yesterday at 8am, the Kiwi failed to kick on overnight and starts this morning only a fraction higher against the USD, steady with the EUR and lower against the other majors

Bank of England policy makers left interest rates unchanged at 0.5% overnight, moving into a holding pattern after November saw their first hike in a decade. The Monetary Policy Committee reiterated that “further modest increases” in the key rate would probably be needed over the next few years if the economy performed as expected, without providing additional detail on the timing.

As expected, there was little surprise in the ECB monetary policy decision, which kept all three key ECB rates unchanged. “The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively”. The ECB announced that rates will "remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases." As it unveiled before, QE will run at €30BN per month from January 2018 until the end of September “or beyond, if necessary.

The Swiss National Bank (SNB) is maintaining its expansionary monetary policy, with the aim of stabilising price developments and supporting economic activity. Interest on sight deposits at the SNB is to remain at –0.75% and the target range for the three-month Libor is unchanged at between –1.25% and –0.25%.

In the week ending December 9, the advance figure for U.S. seasonally adjusted Initial Claims was 225,000, a decrease of 11,000 from the previous week's unrevised level of 236,000. The 4-week moving average was 234,750, a decrease of 6,750 from the previous week's unrevised average of 241,500.

U.S. retail sales increased more than expected in November as the holiday shopping season got off to a brisk start, pointing to sustained strength in the economy. U.S. Retail Sales rose 0.8% last month. Data for October was revised to show sales gaining 0.5% instead of the previously reported 0.2% rise. Economists polled by Reuters had forecast retail sales increasing 0.3% in November.

UK Retail Sales rose 1.1% in November, well ahead of the 0.4% market expectation and 0.5% increase from October.

Global equity markets are lower: Dow -0.08%, S&P 500 -0.12%, FTSE -0.65%, DAX -0.44%, CAC -0.78%, Nikkei -0.28%, Shanghai -0.32%.

Gold prices have rebounded $10 or 0.8% to $1,255 an ounce. WTI Crude Oil prices are modestly higher 0.1% trading at $56.79 a barrel.

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