2016-10-21 14:55:17

The USD has been rising in the market. Investors are preparing for the rate hike in the United States. According to CME Group, futures market estimates probability of the rate hike in December at the level of 74% against the level of 69% on Wednesday. The index WSJ, which reflects positions of the USD against a basket of 16 currencies, has grown by 0.5%, to 88.36.

The rise in the USD is also supported by the strong fall in the pair EUR/USD, which is the most liquid currency in the market.

It became known that yesterday the ECB did not change interest rate, and ECB President Mario Draghi said that the asset purchase program can be extended. Recall that the ECB continues QE program, buying European assets in the amount of 80 billion euro (88 billion dollars) every month.

The US stock market is declining amid the rise in the USD. Yesterday, Nasdaq Composite fell by 0.09%, the S&P 500 by 014%, DJIA fell by 0.22%.

Today, the decline in indices continues. While the USD is rising amid strong US macro- economic data and comments of Fed officials about the rate hike.

Wednesday night Governor of New York Fed William Dudley said that the Central Bank could raise interest rates by the end of this year.

Earlier this week, Vice-Chairman of the Fed Stanley Fischer made similar statement.

US Fed policy is getting more distinct from the policies major world Central Banks, which also boosts the rise in the USD.

As a rule, the increase in the interest rates has a negative impact on the stock market. However, such measure as the rise in the interest rate on its own will not be sufficient to change bullish trend in the stock market. The head of the Fed Janet Yellen said that gradual increase in the interest rate shows positive state of the national economy. So it seems that the US economy is sufficiently strong, which makes the rise in the interest rate possible.

There will not be economic news today, so the rise in the USD is likely to continue till the end of the day.

S&P500: US economy is sufficiently strong to cope with the consequences of the rate hike in the country.  Fundamental analysis for 21/10/2016