Global macro overview for 12/12/2016:
The most important fundamental event of the day seems to be the FOMC interest rate decision and the economic assessment. Market participants are poricing in the probability of the rate hike on Wednesday at 100%. 92% of that is in favor of a move for the Fed Funds rate range to 0.50-0.75% from 0.25-0.50%. The remaining balance of 8% is looking to 0.75/1.00%. The chances for the Fed not to hike interest rates are very small and there are plenty of reasons for that. The most important one seems to be a lack of excuses for not hiking now and it's probably not a coincidence that they are raising rates at the same time as last year. If they wouldn't increase the rates, they would lose all the credibility. As Fed Chairperson Jannet Yellen said earlier this year there would be at least two interest rate hikes in 2016. In conclusion, it is not about the interest rate hike which is rather certain, but about the message that will come with the hike, and particularly, whether the US central bank plans to continue tightening in 2017 and how many times. Hopefully we will find out on Wednesday at 08:00pm GMT.
Let's now take a look at the US Dollar index technical picture in the daily time frame. The bulls are still in control over this market as the index is trading just around the recent highs at the level of 102.06. The trend remains bullish as long as the level of 99.12 is not clearly violated.
