A full run down of this morning’s FOMC policy decision can be found by clicking here.

A series of measures to stabilise the Russian Rouble were announced overnight sending the currency sharply higher. Alongside the Russian finance ministry announcing that it would intervene to defend the Rouble, the Russian Central Bank announced a series of measures designed to support the domestic financial sector.

Greek policymakers failed in their first attempt to elect a new President overnight with only 160 of 300 members voting in favour of the nominated candidate Stavros Dimas. With 200 votes required policymakers will continue to debate the appointment before voting again on December 23.

US CPI fell by 0.3% in November, below forecasts for a decline of 0.1%, with the reading the sharpest month-on-month decline since December 2008. The fall left the annual rate at 1.3%, below the 1.7% pace of October and the lowest level seen since February. Excluding energy and food inflation increased by 0.1%, in line with expectations, with the annual rate slipping to 1.7% from 1.8% in October.

US mortgage applications fell last week with the MBA mortgage market index slipping 3.3%. Led by a 6.9% drop in new mortgages, along with no change in refinancing, the figure was well below the 7.3% surge recorded in the previous corresponding week. Showing that rates probably played little role in the decline the average 30-year mortgage rate fell 5bps to 4.06%.

Eurozone inflation fell by 0.2% in November, unchanged from the preliminary estimate released earlier in the month, with the annual rate also holding steady at 0.3%. Excluding food and energy core inflation fell 0.1% with the annual rate holding at a 5-year low of 0.7% for a second-consecutive month.

Eurozone wages increased by 1.4% on year in the September quarter, a result that was in line with the upwardly-revised 1.4% pace of Q2.

Mixed news from the UK labour market overnight with unemployment unexpectedly holding steady while at the same time jobless claims and earnings exceeded expectations. Unemployment came in at 6.0%, unchanged from September, although the figure was below median forecasts for a decline to 5.9%. Offsetting that disappointment average weekly earnings excluding bonuses rose 1.6% on year, the fastest pace of growth since October 2012, while unemployment claims dropped by 26.9k in November, a figure that beat the 25.1k reduction of October and expectations for a decline of 20k. In what is good news for UK consumers real wages growth, that adjusted for inflation, went positive (+0.3%) for the first time since September 2009 in October.

As expected members of the Bank of England’s MPC voted 7-2 in favour of keeping their key bank rate steady at 0.5% during their December policy meeting. As was the case in November members McCafferty and Weale voted in favour of hiking rates to 0.75% citing the possibility of a sharp pickup in wages growth due to tighter labour market conditions. In a sign they are not yet concerned with disinflationary pressures the minutes also revealed the MPC expect inflation to fall below 1% in December, something that will see Governor Mark Carney writing a letter to the Exchequer, although the subsequent decline in interest rates should be supportive of growth and medium-term inflation expectations moving forward.


The Day Ahead (AEDT)

The ASX 200 look set to rocket higher this morning on the back of short covering and a surge in US equities with SPI futures pointing to a gain of 62pts on the open. While broad-based gains are likely it will be interesting to see whether the move can be sustained given implications for global capital flows as a result of this morning’s FOMC policy decision. Adding intrigue to today’s session it’s also index options and futures expiry. Over the course of 2014 the index has finished higher on expiry on 82% of occasions.

The AUDUSD has fallen with a thud this morning, largely as a result of Janet Yellen’s press conference following the FOMC decision, with the pair touching a low of .8109 before staging a modest recovery into the New York close. With the USD looking firm the pair remains a clear sell-on-rallies prospect at present. Support starts at the overnight low, .8086 and at .8065 with resistance likely to kick in at .8140 and again at .8160.

Regional data releases today include New Zealand Q3 GDP along with Chinese house price figures for November. Later in the session we’ll also receive jobless claims, services PMI and the Philadelphia Fed manufacturing survey from the States, German business confidence along UK retail sales. Data aside we’ll also hear from Russian President Vladimir Putin who will hold his annual press conference whilst German Chancellor Angela Merkel will address the Bundestag. Last but not least, Russia’s Central Bank is also schedule to release weekly foreign currency reserve figures. Given the moves in the Rouble this week this figure should be interesting.


Market Map Dec 18 2014















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