Strong volatility on the markets was seen in the first day of the week ahead of FOMC decision on interest rates. The Federal Reserve will probably raise interest rates for the first time since 2006, but it’s not the main point of the meeting. The FOMC will raise rates, but the market will focus on the rate path and on overtone of the FOMC statement. With recent turmoil on the financial markets the Federal Reserve is expected to be cautious and to reinforce that the path will be gradual and fully data-dependant. Dot-plot will be the most important part of the meeting as themarket expects the dots to be lowered.
It was swing day for European indices as rebounded in the morning , due to better prospects about Chinese growth and closed at local lows as oil sinked to the lowest since February 2009. China’s latest round of data showed fresh evidence of stabilization in the world’s second-largest economy. Saturday’s reports showed industrial output climbed 6.2 percent in November from a year earlier, compared with a 5.7 percent median estimate of economists surveyed by Bloomberg. Retail sales gained 11.2 percent for the best reading of 2015, while fixed-asset investment increased 10.2 percent in the first 11 months of the year. Data shows that the risk of a hard landing remains low.The macro-policy easing measures taken earlier this year have had a favorable impact on growth.
As mentioned, the oil price tumbled to the lowest since 2009 as Iran’s deputy oil minister for international and commerce affair, said there’s absolutely no chance Iran will delay its plan to increase shipments even as prices decline. Such information determined a movement on the oil for the European session with break of 35,00 USD per barrel for WTI. However, during Wall Street session oil rebounded as mach as slightly below 3,0% on daily basis. Such a move led to a little rebound on Wall Street with S&P 500 returning above 2000 points.
Both NOK and SEK will be vulnerable ahead of the Riksbank’s and Norges Bank meetings that will take place later this week. Swedish Central Bank will decide on interest rates on Tuesday and the market expects no changes in policy. The same situation is with Norges Bank (meets on Thursday), but about one in three economists see the Bank cutting rates.