December 15, 2021 14:17:52
Will the December dot plots see similar moves to the more hawkish changes that were made after the June and September ones at tonight’s FOMC meeting? Consensus fully expect the Fed to move into the next tightening phase which currently means two hikes in 2022.
How does Chair Powell now describe inflation, after holding onto and then ditching the “transitory” moniker? The end rate of the hike cycle will be key. Markets already have nearly three hikes priced in for the next 12 months.
A decent few job reports could push that path beyond what traders currently see. Similarly, a more decisive approach to inflation. But the spread of Omicron or simply a Fed in need of more room to assess the start and pace of hikes could disappoint traders.
AUD/USD downtrend eases
This major has been in a long-term downtrend, falling to 0.7105 in mid-August. Prices retraced on a couple of occasions reaching a high at 0.7555 in late October. Since then, we ‘ve seen a bearish descending channel with a series of lower highs and lower lows.
The five straight weeks of losses made a low at 0.6993 which was last seen in July 2020. The October/November 2020 bottoms offered strong support as did a Fib level at 0.7052.
Prices have retraced again breaking trendline resistance from the October top. The August trough is offering support at 0.7105 but the September low at 0.7170 has acted as resistance on several occasions very recently. The 21-day SMA is also acting as near-term resistance. The Fed meeting will decide which level we break first.
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