US employment data exposed the Federal Reserve’s odds of moving earlier than expected. Unemployment in the United States fell to 3.9% and is reason enough for Fedwatch, the body that monitors the behavior of the Reserve, could raise interest rates in less than two months. Members considered that the conditions for the rate hike could be met soon if the recent pace of improvement in the labor market continued. This week the odds could go even higher if consumer and producer inflation data manage to drop below 4%.
President Powell renews his term next week, saying the maximum criteria for reducing bond buybacks in August have been met. The Committee now suggests that you are close to meeting the employment criteria to increase rates. The latest Minutes from the December FOMC meeting showed that members could agree to begin reducing the size of the Federal Reserves balance relatively soon after starting to raise the Federal Funds rate.
Remember that at the meeting, the FOMC members decided to double the pace of reductions in bond purchases from $ 15 billion per month to $ 30 billion per month. This would effectively end the Fed’s quantitative easing program in March. Additionally, members’ rate hike forecasts show an average of 3 rate hikes in 2022 and 3 rate hikes in 2023. sheet.
The international currency market settled its earnings in dollars and moved to European crosses. The bet seems to be only temporary to take advantage of good news in the results of inflation this week. USDCAD closed sell. The preference is mixed and will depend on the opening on Monday. Above 1.2650 only buyers up to 1.27, above 1.27 the buy pressure increases to 1.2750 and 1.2780. Sell are not preferable although they could be a viable scenario below 1.2630 to 1.26. EURUSD and GBPUSD closed higher. EURUSD completed its interval at the highs leaving room for a last level that goes from 1.1370 to 1.1380, below 1.1350 we could have take profit.
GBPUSD closed buyer, passing 1.36 will increase its buy pressure to 1.3650 and possible 1.37. We rule out sell scenarios. The cross that could reverse this week is USDJPY. If the good news continues for the United States, capital outflows from the cross will become apparent, down from 115.50 to 114.0 and 113.0. USDCHF returns to sell between 0.9180 and 0.9170. Below 0.9170 to 0.9140. Below 0.9190 we rule out buyers. Commodities for their part closed without major changes. Gold failed to position itself at the close of the American stock market over 1800.0. The preference is buyer above the levels of 1790.0 and 1800.0 with a first target at 1807.0. Silver had a better performance and remained above 22.30, the preference is buyer for the coming week over 22.30 until 22.55 and 22.60.
The SP500 and US30 have not performed positively since all-time highs. The market liquidated positions at the end of the year and there are still no signs of new buyers at these levels. The price falls could continue for next week. The cryptocurrency market closed lower although it is approaching tempting levels for new buyers. BTC and ETH could be the protagonists of capturing new capital thanks to the year-end liquidations.