The Federal open market committee statement last night reaffirms possibility of a lift off in December. The committee highlighted the fact that there is less global risk at the moment and if incoming economic data continues to meet expectation, then we might see a lift off. The committee however, reiterated the impact of a lift off on the emerging economies. Emerging markets over last couple of months has seen a massive depreciation on their currencies and outflow of capital from their markets. These are some of the possible adverse effect we might see on the emerging market if the FED eventually raises interest rates. On the back of this statement, the stock market rally across the board, Dow Jones closed by more than 1% up. USD pulled back, gold rallied to the upside, EURUSD rallied, GBPUSD rallied and all emerging market currencies rallied against the USD.
The Bank of Japan this morning, left interest rate policy decision unchanged, during its press conference mentioned that continuing quantitative easing would not destabilize the financial system, the governor also mentioned that inflation is picking up, machinery orders are improving, consumption is firm, demand is rising, export is growing in GDP, export is flat for the time being nut it will gradually rise along with industrial production. He sees a virtuous economic cycle and down played any effect of Paris attack on global economic outlook.
Looking at the market in the European trading today, Eurusd still remains bearish despite the rally during the Asian session, the major resistance at 1.08 area is still holding, this confirms there is more downside. Gold is still bearish and the downside move is still active despite the rally during the Asian trading. Oil prices are expected to plunge to the downside as the major resistance at $42.47 still holds.