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Friday fireworks fizzle out

Markets look to be taking the increased prospect of a rate hike from the Federal Reserve next month in their stride with the usual fear that might have griped investors not materialising. The Asian session has got the week off to an inconspicuous start despite relatively weak export data from China overnight and the going will remain slow with little in prospect from the economic calendar today.

After the fireworks last Friday following the impressive nonfarm payroll release which led to a surge in the dollar, FX markets are benign this morning with the likes of GBPUSD and EURUSD just bouncing a little against the greenback. This profit taking in the dollar may not last though as the prospect nears of the commencement of the Federal Reserve’s tightening cycle, but even though the chances of that coming on 16th December have increased significantly, risks still remain and a lot of focus will be given to Chinese data this week in the form of CPI tomorrow and retail sales and industrial production on Wednesday. There is also a speech from Janet Yellen this Thursday to watch out for and crucially one more nonfarm payroll release next month ahead of the all crucial December FOMC meeting. I may now be in the minority, but remain in the 2016 hike camp.

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