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January 2017

Oil price volatile yesterday

Published: Wednesday 04 January 2017

  • Minutes of Dec FOMC meeting
  • Oil price volatile yesterday
  • Eurozone will release PMI services 
Today the focus will turn to the minutes of the December FOMC meeting. Besides the discussion over the 25 basis points rate hike decision made on the month, we are closely watching for any chatter within the committee around potential monetary policy changes as Mr Trump takes office. The President-elect has been proposing pro-growth fiscal policy. We will also look for the rationale behind the more hawkish shift in the dot plot which signals an increase to 3 rate hikes in 2017. The growing consistency of strong USA economic reports has also added to expectations of additional tightening by the Federal Reserve - currently, federal fund futures are pricing in around 70% chance of another rate hike by June this year. Those minutes shall be released around 7pm this evening and could well see further Dollar strengthening.
The price of oil was volatile yesterday. Initially jumping as Kuwait and Oman indicated that OPEC are close to an agreement on production cut. However Libya is ramping up production again so oil did fall slightly from its 18 month high of 55.24.
On the data front, Eurozone will release PMI services in European session. EU Inflation data is also due. In the UK we await the release of construction PMI, mortgage approvals and M4 money supply, these will be closely monitored after the stellar manufacturing data yesterday. No key economic data is scheduled for US and focus will be on FOMC minutes as discussed earlier.

Overheard in Trump Tower
Donald Trump – On my fifth day in office, I will expel all the illegal workers
Assistant – Ok Mr Trump but why wait until day 5?
Trump – I wanna get the gardens done and the pools cleaned first  

Daily Currency Insight by Charlie Horsley

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