The market is now pricing in over an 80% chance that the Fed will raise rates next week. For those still in the minority camp of expecting a rate hike in 2016, last week’s nonfarm payroll was yet further evidence to suggest the Fed will move on 16th December. It’s hard to hold onto a view when the latest data is heavily supportive of a hike this month. Ultimately it is economic conditions that dictate what will eventually materialise and just as financial markets move constantly, forecasters have to adapt their views to reflect those changing conditions.
Risk assets are set to open in the black this morning following a strong rally in US stocks last Friday after the nonfarm payroll data gave investors greater certainty over the Fed next week. For US indices the Christmas rally is under way, but the same cannot be said for European indices which remain below the levels they commenced December. For the FTSE near term resistance is seen around 6350 and in the Dax 11,100 is the near term hurdle. The economic calendar is quiet today but overnight there’s Japan’s Q3 GDP expected to see growth return to 0.0%.