17.12.2013- The Fed meeting begins today
European stock markets ended the day with steady growth. The cause for optimism was the large block of data, which, despite its ambiguities, was positively perceived by the markets. We have seen the reduction of flash manufacturing and services PMI in France to 47.1 and 47.4, respectively, vs. expected figures 49.1 and 48.9. The Europe's largest economy flash manufacturing PMI sector rose to 54.2 while anticipations were at 53.1. In Germany flash services PMI has fallen to 54.0 vs. predicted 55.2. The same situation was observed for the euro area as a whole. The flash manufacturing PMI increased to 52.7 against the forecast of 51.9, and in the service sector has fallen to 51.0 against the forecast of 51.5. Eurozone trade balance in October showed an increase to 14.5 billion, but did not meet the expectations of growth to 15.2 billion.
In the U.S., statistics was more positive. Thus, the industrial production increased in November by 1.1%, with growth forecast at 0.6%. Also, the capacity utilization rate in the United States has grown by 0.8% to 79.0%. The business activity index calculated by Markit, fell short of expectations of analysts and appeared at 54.4 versus 54.9 forecasted. In this regard, the euro reached 1.38, but then fell back down and now continues to consolidate at the 1.3760 mark. Growth is limited by a local maximum at 1.3810. Support levels are at 1.3710 and 1.3660. We expect volatility the next few days to increase because any declaration by members of the Fed may lead to increased speculations on reducing of the quantitative easing program. In addition, the course of trading today can be influenced by the index of economic sentiment in the euro area and the consumer price index (10:00 GMT). In the U.S., will be also released the data on the consumer price index for November and the Balance of Payments for the 3rd quarter (13:30 GMT).
The British pound continues to move inside the local correction channel and cannot be fixed above the strong level 1.6320. In case of further decrease, the price can reach 1.6230. Growth is limited by the resistance at 1.6440. Today we should pay attention to the production and consumer inflation and also to the housing price index in the UK (09:30 GMT). USD/JPY continues to consolidate at a mark of 103.00. We expect the price movement to continue within the local rising channel. The support levels are the 102.60 mark, and the lower bound of the above mentioned channel.
The minutes of meeting of the Reserve Bank of Australia clearly stated that the regulator is prepared for further lowering of the interest rate to weaken the national currency and to support the non-mining sector. Despite this, the Australian dollar continues to consolidate near the 0.8950 mark. We expect a further decline of the pair AUD/USD due to loose monetary policy of the RBA. At the same time, such a long lasting consolidation indicates a desire of bulls to defend 0.89 level. Growth is limited by the level of 0.90. Target price remains at 0.89.
The price of Light sweet crude oil fixed below the level of 97.30. Today at 21:30 GMT, will be released the statistics on crude oil inventories in the United States. Despite this, oil traders are taking a close look at FOMC meeting, during which the fate of quantitative easing in the U.S. will be decided. In Libya the authorities have failed to unlock the ports and the export of oil is now at the level of 110 thousand barrels per day, compared with 1 million in July. This fact supports the quotes of the North Sea oil standard - Brent, whose price rose to 110.50. Quotes of gold are gradually rising, but remain within the corridor 1220-1265. Further price movement will depend on the intentions of the Fed for further repurchasing of bonds on the market.