Global macro overview for 17/07/2015:
Yesterday's testimony by Federal Reserve Chairperson Janet Yellen had revealed another clues about a possible rate hikes this year. This assumption comes in line with what the most of the economist are thinking right now about the possibility of a September 2015 rate hike by FED. Over 82% of them agrees for the possibility of sooner short-term rate hike, the recent pools revealed. 15% still thinks, the FED will wait with the rate hike until December. In June, the majority had been more in favor of sooner rate hike (72% September hike vs. 9% December hike). The Fed has kept the interest rate near zero since 2008. Moreover, it hasn't raised rates since June 2006. it looks that might changer sooner than what most of the economist thinks.
The probable market reaction for the rate hike in long-term view would be:
- EUR/USD moving lower to the parity level or below
- USD index moving way higher above 100 level
- SP500, DJIA and other main economy benchmarks entering a corrective cycle ( some of them are starting to divergence already)