Rate Decisions In Every Corner Of The Globe

The Federal Reserve has surprised the markets with an increase in the QE up to $85bln, but at the same time setting an inflation and unemployment target (2.5% and 6.5%). The disappearance of the zero rate policy has cooled the enthusiasm on gold and equity, while it has strengthened EUR/USD, again close to the resistance of 1.3170. There will be many macro data expected for the coming week, virtually the last one before Christmas. Among the most important ones, there are: December 18, the current account deficit, December 19 the housing starts, December 20 the Phily Fed, leading indicators and then closure on December 21 with durable goods.

The Direction Of The German Locomotive
Following the important decision about the formalization of the union bank on March 1, 2014, the Ifo index is the only real macro date appointment of the week in Europe. The confirmation of the optimism emerged with the ZEW index comes from this data. In Great Britain we can get some more economic information; on December 18 the inflation data will be released and on December 20 the retail sales of November that will try to recover from the bad -0.8% of October.

After The Japanese Elections...
The meeting of the Bank of Japan on December 20 will be quite a significant one. This event comes after the general election of December 16 and together with Jpy full of expectations after the tremendous weakness in the recent weeks that has led USD/JPY close to the key resistance of 83.35. The day before, a macro data that will certainly affect the choices of the Boj on new liquidity measures, is the one concerning the trade balance in red for the past few months by now.

Rate Decisions In Every Corner Of The Globe
If monetary policy is one of the major market movers on Forex, then this week there will be a lot of volatility on many crosses. On December 18th, India, Sweden and Turkey will decide what to do with the cost of money; the expectations suggest the Turkish central bank as the only monetary authority that will intervene with a rate cut of 75 basis points at 5%. The next day, Czech Republic and Norway will announce their rate decisions.

Macro Issues On The Commodities Currencies
Canada will release on December 21 the data on inflation and the GDP of the third quarter, while on December 19 New Zealand will publish its GDP. Attention on Russia, which will release on December 18th the unemployment rate and retail sales.

Trade: Long EUR/AUD At 1238 Stop 1.2120
Our idea is that EUR/AUD is formalizing a bullish head and shoulder and this should favor an upside up to 1.30 in the coming weeks. EUR/AUD has been lingering on the 200-day moving average of 1,241 for weeks and AUD/USD is facing a technical barrier of absolute importance in the long run, i.e. 1.0580. The 14 days ADX has dropped below 15, a very low level that guarantees the explosion of volatility in the coming weeks.


Trade: Short USD/JPY At 83.35 Stop 85.50
Considering the resistance that the market (83.35) is touching at the moment and the proximity to the regression downward line that leads the long-term bear market, going short on USD/JPY with stop at 85.50 seems to be a good idea. The Roc at 12 weeks has risen above 6%, a percentage that has always cooled the rise of USD/JPY in the past, intercepting the primary tops. Obviously, it's a game of chance and if we are in front of the reversal of the bear market started in 2007, then this view will not find a match in our analysis.
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