In another sign that last week’s momentum higher in risk assets is set for continuation, the strength in US dollar and equities has endured since the weekly market reopening. The tailwinds for the US dollar and equities are partially attributed to the increasing likelihood of a rate hike from the Federal Reserve in December. According to closing prices from Friday, Fed Funds futures, which track the probability of policy actions, signaled an 81.10% chance of a 0.25% step higher in rates from the current 0.50% to 0.75%. The other driver of momentum has been Trump’s ambitious fiscal plans which include greater infrastructure stimulus and tax cuts for individuals and corporations that are expected to directly benefit economic activity and inflation. EURUSD remains under pressure as European policymakers react to the election results with panic after calling an EU emergency meeting over the weekend.
December Rate Hike Speculation Climbs Further
Daily Analysis - 14/11/2016