 Okay, very good morning to you. It is Thursday the 16th of December and going to recap briefly what happened last night for the FMC and why Equities rallied and the dollar is still on the back foot this morning having weakened substantially Irrespective of the hawkish policy change from the Federal Reserve, so we'll dig into that Then we're going to talk about a preview for the Bank of England We've also got the ECB and the Turkish Central Bank decision We got an update on the Build Back Better stimulus timeline in the US And of course we'll also update on the UK Omicron situation following the Prime Minister's conference with Chris Whitty yesterday but first off let's have a look at the charts and Yeah, back to all-time highs for US equities and just for an example I'm going to bring up the S&P 500 chart here And this is the FMC inspired move that we saw yesterday Right here, and you can see then we've completely reversed all of the losses that was seen at the beginning of the week Namely on the back of the increasing global Omicron fears as that variant continues to spread But you can see completely reversed and we're back now to on the daily chart here We've briefly touched on the previous record high seen on the 22nd of November Just finding some resistance here this morning as Europe come in pick up the baton from the higher closer Wall Street The S&P finished up 1.6 percent to Dow 1.1 the Nasdaq up 2.2 percent And so we've just touched on that 47 40 and a half mark again this morning. So very bullish Outcome for US equities in step with that oil also moved higher Gold was up as well and the major currency pairs here top left also rallied on the back of Weakness in the dollar despite an initial blip higher Confirmation on some of the hawkish changes in policy the dollar has declined thereafter and I'll explain why in a second But you can see here cable has broken out above this morning quite a key level of technical resistance That's held since last week on multiple occasions. We've just ran up higher to around 132 93 at the moment ahead Of course, what is another knife edge Bank of England rate decision will get at midday the battle and trade-off between Height and inflation against the deterioration in the Omicron situation as to determine their course of action today But you can see here sterling seeing bit of a breakout and again the pound accelerating Really yesterday through What was a couple of things we had the Bank of England come out? Well the latest data I should say came out for CPI and that was what we had Yesterday morning. So this was this move and peak in price here Then had a bit of reversal on that on the Omicron Situation developing the UK going from about to worse quite quickly But then the Fed came out with their announcement and the dollar weakened And so it sprung back up and now we've just broken back above higher again this morning So quite a seesaw rollercoaster for for cable But look, let's get straight to the headlines and first off Just gonna very quickly recap what the Fed said last night and I did do a specific video on this Yesterday evening, so I'm just gonna do a top-level overview now if you want to check out in more detail check out that video on the YouTube channel But in terms of the overall takeaway the Fed did pretty much as we were expecting So they increased the speed of tapering they doubled that from 15 to 30 billion That's as very much expected the projections published alongside the statement showed officials expect three Quarter-point increases in the benchmark federal funds rate would be appropriate next year and then they flagged concerns about The new Omicron strain they said specifically risks to the economic outlook remain Including from the new variants of the virus and one of the things here that I thought was quite interesting was this is the table of the summary of economic projections And when I was looking at this last night even though the word transitory has now been eliminated from the Fed's kind of comms The one thing is is that this table basically is still showing a belief that inflation is indeed transitory It's almost like the word's been dropped But the idea from Fed officials still remains and actually Fed's power said in the Q&A that bottlenecks Will alleviate over the course of next year Inflation will come down significantly towards the back end of next year And if the economy turns out not to be a strong will adapt policy accordingly and so actually here looking at core PC PC inflation you can see they've had to Ratch that up a few notches for the end of this year from what they previously thought back in September However, they do see it dropping quite substantially then by this time next year And so I think overall a fairly balanced Takeaway it wasn't too far from what markets are expecting some definite hawkish changes to policy overall Accelerating tapering and raising inflation forecasts seeing continual progress in the labor market However, it's a fairly well telegraphed managed situation from from the US central bank and and the markets liking it as we've just seen on the charts We did see the new dot plots as I mentioned Again, you can grab these graphics from my Twitter account. I did we share them this morning This just looking at the rate trajectory over each subsequent year there after this And there has been a slight tweak but again as very much markets were anticipating So let's turn our attention then to the Bank of England because following yesterday's November CPI print which came in at 5.1 percent a decade high much higher than expected that has seen Market pricing move expectations for a hike today from the Bank of England to around 66% probability if we go back to Monday prior to that inflation print it was tracking on a honor even 5050 so the market is now leaning on the probability that the Bank of England will hike rates And the pound certainly is moving higher this morning But as well in by product of the weakening dollar following what I've just described from the Fed So you're a dollar is also higher at the moment on the back of that greenback Weakness now for me. I don't think the Bank of England gonna hike and the obvious and main reason why of course is Omicron and Gonna talk about Omicron. Well, let's wrap in Omicron and what's going on there at the moment Because inflation aside, this is what's been going on in the UK as we saw yesterday the UK reported 78,000 610 coronavirus cases the most since the beginning of the pandemic Underlining then this fear of how highly transmissible this new variant is Covid hospitalizations are up now 10% nationally week-on-week and up by almost a third in London Where if you look at the actual national breakdown of cases, it is definitely the most apparent that it's accelerating in London the most Now, this is one of the things that I was talking about one two weeks ago, which was even though let's say Symptoms in some fashion can be more mild the understanding here is simply a numbers game whereby if more people get infected even though the proportionate ratio of people who then have more severe symptoms is lower given the more mild Symptoms of this particular Omicron variant if the number is great enough or then proportionately even if it's a small percent Hospitalizations are going to go up. And of course, this is a very challenging time of year anyway season Lee just given the weather and so forth. So Yeah, there was a somewhat sense of inevitability about this But it's certainly starting to come to fruition UK officials said they confirmed the number of positive test results as well as a significant underestimate of the spread in the country Going back to the beginning of the week. You remember said G Javid the health secretary said that he thought there were 200,000 infections each day and the latest estimate now is that you remember when they gave the press conference Because last week on Thursday, they were saying that Omicron is basically doubling every two to three days It's now seen at more like one point nine days So it's definitely gonna get worse before it gets better in that sense So just flicking back to the Bank of England then for me. This really does then Cement in my head that yes inflation is worryingly high and Yes as a marker of Statistics, it's a decade high However, I think that just like what the Fed have done yesterday with their projections I think the Bank of England will hold the same view. They're not going to be stubborn enough to think that They're gonna get this absolutely nailed on But if you think about the projections and how the Bank of England sets policy They look at policy on a two-year horizon Now will a rate hike now in December by 15 basis points or one in February by 15 basis points Make a difference on that rate trajectory in the economy over a two-year horizon I find that a hard case to kind of spin to be honest and you know You start to layer in committee members like Michael Saunders who is one of the outlying Hawks Who of course voted for a rate hike in that 7-2 split? We saw previously and has done for a while He suggested in the past that new facts surrounding the virus may require a pause for additional thought and You know since he spoke this was Prior to really on the crime outbreak happening and so yeah I think for these reasons I sighed much more with the economists who are on the side of they stand pat for now And if things remain the same they look to hike in February and that would be against market expectations Which are for a rate hike to be executed today now in terms of market impact obviously just looking at the positioning of sterling at the moment The market is pricing in whether by dollar Weakness on the Fed or by Bank of England pre positioning cable is tracking quite high in the relative range of what we've been trading in the last week So failure to execute the hike could well see quite a large snapback down lower in the price of cable So do be aware of that when it comes out later on today, but obviously commentary that follows will be key Not only do you get the announcement you get the statement you get the vote split you get the minutes So quite a lot Intel coming out later from the Bank of England All right moving on Let's talk about the ECB because they're also happening So you get the Bank of England at 12 12 40 12 you get the ECB at 12 45 So within that our slot 12 and 1 is when the main kind of action might occur Analysts are ing the Dutch bank They expect the ECB to stick to the transitory narrative when it comes to inflation with staff projections that may see only small changes They should delay this got any discussion on tightening to a much later stage With the focus set to be on the fate of the asset purchase program again to be clear with the the ECB I think they're not at the same place as where the Bank of England and the Fed are at this point in time I think any talk of tightening is a little bit premature This is more about the tactical or strategic way which they're managing then the end of tapering So they're kind of a much earlier cycle of ending these pandemic induced kind of policies that were put into play Economists and here's a look at the the current pep and asset purchase program Economists surveyed by Bloomberg expect the pep purchases to drop to 50 billion euros a month in February from around 68 billion euros in October November Bombing under the regular asset purchase program, which would be the yellow one Will double to 40 billion euros a month starting in April before gradually slowing with all asset purchases Then ending in the final quarter of 2023 So if you've been following these briefings, there's nothing really new here to talk about what the economist expects is that transitional effect Decreasing slowly then before turning the tap off on pep at the same time Increasing temporarily the asset purchase program to just smooth out any kinks on the market being concerned about a too rapid a pace of withdrawal of stimulus Before I talk about the next stories just a reminder we've got our final Simulation happening our finance accelerator later on today. I think it's four to six p.m. London time So if you are a student if you've not done this before then just jump on amplify me comm and you can register for that That's happening later on today. It's absolutely free simulation takes about two hours But it gives you a real hands-on practical experience for you to apply perhaps some knowledge that you have already Or to just come from ground up and scratch and see what it's like to be a sales trader a market maker or an asset manager In a in a real-world scenario, so check that out on that find me comm final one of the years happening today And we've already trained well over 15,000 students over the last three months Moving on then back to central banks. It really is a busy one and there's two more. I've got to go Turkey and Australia and for Turkey they've got their interest rate decision and It comes in the context of the lira still under pressure another record low was hit yesterday as traders are kind of bracing themselves for further easing and The currency has fallen past a psychologically important 15 per dollar mark for the very first time The bank is expected to reduce the one week repo rate by a hundred basis points to 14% Well below inflation, which is currently tracking at over 21% as far as November data is concerned And that was the fastest pace of inflation in Turkey in three years Yeah, the announcement comes President Erdogan has replaced two deputy finance ministers so just the latest in a long string of casualties to just kind of inaction his will which is this somewhat controversial and and different view on monetary policy and At this point in time, it looks like he's going to get his way So if that is the case then the Turkish lira could be highly susceptible to some more weakness going further forward in the rest of Session the other thing then was Australia. They didn't have an interest rate decision but this is the governor Philip Lowe and He said the bank may end its asset purchase program as early as February of 2022 But Lowe suggested he was in no hurry to raise interest rates and any move to hold asset purchases would not affect the timing of That decision. So again, it's kind of like what the Fed were doing previously is you're trying to disassociate any singular decision to be overall policy and showing that there's a sequence of events I stopping tapering Re-evaluating before then going with the rate hiking cycle, which is normally the traditional pattern. We've seen in history Overnight as well. The Aussie is a little bit firmer and worth noting Australian unemployment rate for November after they were somewhat Ravaged by their own coronavirus situation and lockdowns The November unemployment rate came out overnight at 4.6 percent That was considerably lower than 5 percent and quite a sharp drop from the prior months 5.2 percent So the Aussie dollar as I speak is actually at session highs at the moment Of course again comes in the context of that weaker dollar post FOMC And then the final thing I wanted to comment on is just an update on US stimulus as you would imagine Politicians are just digging their heels at this point in time Doesn't look like anything's going to get done this side of Christmas talks between Senator Manchin and President Biden are now not going well On bill that better according to sources This is after reports on Monday that everything was looking more positive Kind of reverted back to type US Senate Majority Leader Schumer is likely to push back a vote now on the bill that better plan Until next year according to different sources as well in the overnight session All right And that is it so gonna leave it there wish you guys a good day any questions at all feel free to drop me a comment I'll probably be tweeting out a few updates around the van coming in the ECB later So there's my hand or if you want to stay informed Don't forget to check out Amphi me.com whether for the simulation or for the daily newsletter We put out which you can find at the bottom of the website. All right. Take care guys. Have a good one