16.12.2013- Volatility decreases, everyone is waiting for the Fed decision
The last trading day of the week has shown once again that market participants are not ready for active moves. Meeting of the FOMC, which will be held on December 17-18, stimulates investors not to hurry with building up new positions. We recall that at this meeting will be decided the future fate of the quantitative easing program, according to which, now every month, the Fed buys bonds for 85 billion. The course of trading on Friday was influenced by data on unemployment in the third quarter in the euro area, which has not changed as was expected. Employment in the euro area has not changed for the second consecutive quarter. In 17 countries of the Euro zone, the unemployment according to the latest data is 12.1%. PPI in the United States at the same time decreased by 0.1%, analysts did not expected any changes. On this background, the quotes of EUR/USD are consolidating above the support level 1.3720. The growth so far is limited by a local maximum at 1.3811. The dynamics of trading today can be influenced by a large number of important statistics in the euro area, among which are flash manufacturing and services PMI in France (08:00 GMT), Germany (8:30 GMT) and the euro area as a whole (09:00 GMT). Data on the trade balance of Euro zone will be published at 10:00 GMT. In the United States we should pay particular attention to Empire state manufacturing index (13:30 GMT), flash manufacturing PMI in the U.S. (14:00 GMT) and the industrial production in the U.S. (14:15 GMT). The British pound on Friday came out of the side channel after breaking through its lower bound. Now the price is consolidating at mark of 1.63. In case of further decrease in quotes, the price can reach the support at 1.6230. Further movement of the pound will depend on results of the U.S. Federal Reserve meeting. USD/JPY corrected within local uptrend. Data on the Tankan non-manufacturing index in Japan, which rose to 20 while experts were waiting for growth to 16 caused a sharper strengthening of the yen than we predicted. Level of support is the lower limit of the upward channel, which coincides with the horizontal support level at 102.60. Growth is limited by the upper boundary of the channel and by a local maximum at 103.90.
AUD/USD was unable to reach the target level of 0.89, and after a strong decline and consolidation it started to correct. Tomorrow at 00:30 will be published the minutes of the meeting of the Reserve Bank of Australia. We should recall that loose monetary policy of the central bank is a key factor for the weakening of the national currency. The target price in case of decrease remains at 0.89, after which the price can continue further reduction in the descending channel. 0.90 will serve as a strong resistance level.
Oil benchmark Light sweet crude has fallen after completing the "head shoulders" formation. After breaking through the level 97.30, the price reached 96.50. The next target will be near the support level 95.20. Fundamental reason for the price drop is the decline in demand for fuel, amid which we have seen the increase in reserves. The main bearish factor for prices remains the fear of reduction of the quantitative easing program. We maintain our negative outlook for oil prices. In the long run the production growth in the U.S. and an increase in oil supplies in the Middle East and North Africa will put pressure on quotes. First time in 13 years, the gold drops for the full year. Due to the significant increase in risk assets this year, many investors prefer not to invest in gold, but in the case of change of trend on the stock markets, the so-called "safe haven" will regain its popularity. The world's largest reserves of the "golden" fund - ETF SPDR Gold Trust during the last week showed another decline and now has only 827,60 tons in its reserves. Seasonal demand in China before the New Year supports the quotes. We expect that till the Fed decision on QE program, the price of the metal will remain within the corridor 1220-1265.