Global macro overview for 24/10/2016:
The Fed policy members speeches this afternoon will arouse much interest, coming almost a week before the November meeting. Two of the speakers, James Bullard and William Dudley, may attract particular interest. Both of them are Fed voting members, so their comments may cause an increased volatility on financial markets during NY/London session today. Nevertheless, the overall expectations ahead of Fed meeting in December are still elevated towards the immediate interest rate hike already. The CME Group FedWatch Tool is indicating the 91% probability of 25-50 bps rate hike and 9% probability of 50-75 bps rate hike in December, so currently the market is positioning itself towards even more stronger USD. Only a series of serious comments from Fed policymakers contradicting the current hawkish policy towards the interest rates may change the general consensus.
Let's now take a look at the US Dollar index technical picture on the daily time frame. The market has broken above the golden trend line and currently is trading above all the moving averages, indicating a valid bullish breakout. The bulls are clearly in control over this market and the next resistnace is seen at the level of 99.84, just below the one-year high at the level of 100.50. The immediate support is seen at 97.57.
