After the Federal Reserve’s taper announcement, the focus shifted to the Bank of England interest rate decision at 12.00 PM GMT. The central bank will decide today whether to hike interest rates as inflation in the UK hits a ten year high of 5.1%. In November’s Monetary Policy Report, the BOE said that ‘it will be necessary over coming months to increase the Bank Rate in order to return CPI inflation sustainably to the 2% target.’
On Wednesday, the US Federal Reserve said it will withdraw its monthly bond purchases at twice the pace it previously announced and likely end them in March.
“We are phasing out our purchases more rapidly because with elevated inflation pressures in a rapidly strengthening labour market, the economy no longer needs increasing amounts of policy support,” FED chair Powell said.
EQUITIES
European markets opened higher on Thursday, following the bullish tone on both Asian markets and US futures overnight. US stock futures remain volatile as the markets are unsettled by swings in volatility caused by the Federal Reserve issued its policy statement.
OIL
Crude oil futures edge up after the Fed confirmed their hawkish turn and signaled, they are positioning themselves to tackle inflation in the second quarter.
CURRENCIES
In the currency market, the safe-haven US dollar is retreating versus other major currencies, such as the euro and New Zealand dollar. The pound is gaining ground on both the dollar and the euro during early Thursday trading ahead of the BOE decision.
GOLD
The precious metal recovered from the previous session losses and trades near the session high boosted by the weaker US dollar. At the time of writing, the metal trades above $1785.
Economic Outlook
On the data front, Australia’s unemployment rate declined to 4.6% in November from 5.2% a month earlier and below market estimates of 5%. On the other hand, New Zealand's gross domestic product shrank 3.7% in the third quarter from the previous quarter.
Moving ahead today, the important events to watch:
US – BOE interest rate decision: GMT – 12.00
US – ECB interest rate decision and statement: GMT – 12.45
US – Building permits: GMT – 13.30
Coronavirus update:
Worldwide, more than 270 million people have been confirmed infected and more than 5.3 million have died. The United States has confirmed over 49 million cases and has had more than 796,500 deaths from COVID-19, the highest totals in the world.
Technical Outlook
EURUSD: The currency pair holding the early gains as the traders and investors wait to hear from the ECB President Christine Lagarde, to try and understand if the US central bank is considering any tapering and how the ECB responds to higher inflation.
The important levels to watch for today: Support- 1.1250 and 1.1220 Resistance- 1.1350 and 1.1385.
GOLD: For today, the gold price is supported at $1765. On the upper side, the immediate resistance is around $1795 any break above this level will open 1804/10.
The important levels to watch for today: Support- 1776 and 1768 Resistance- 1788 and 1795.
Quote of the day - “More money has been lost trying to anticipate and protect from corrections than actually in them.” Peter Lynch.
Read more- https://gulfbrokers.com/en/daily-market-report-418