It is difficult to quantify a US rate hike at this juncture, says Brenda Kelly, Head Analyst at London Capital Group, as she joins today’s Tip TV Finance Show to discuss, US rates, and the outlook for FTSE 100, Gold prices and EUR/GBP.
US: Consumption story bodes bad for a December rate hike?
Kelly comments that the recent pullback in US retail sales questions the consumption led recovery of the economy. She believes that the Fed should wait for the consumption to turn back to normal levels before raising rates, and hence, at this juncture, it is difficult to quantify a Fed rate hike.
Kelly adds that there is a huge amount of macro data to be released globally ahead, and views that Yellen will take any excuse she can to avoid a hike. While the FOMC is seen as hawkish, Yellen remains a dove, says Kelly.
FTSE: Wouldn’t rule out a dip below 6k
Kelly notes that the FTSE 100 equity index will remain rangebound while below 6130-6140 levels, and is likely to consolidate ahead.
While 6k has been the level to buy for the last 15 years, Kelly doesn’t rule out possibility of a dip towards the 5900 levels.
Gold: Data and events ahead key for the precious metal
Looking at the technical charts for Gold prices, Kelly notes that the precious metal has seen false breakouts, and the price action remains responsive to USD strength.
She adds that the data and events in the week ahead will be the major driver for gold prices.
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EUR/GBP: Sell around 0.7150
EUR/GBP is still holding above 0.70 area, and as long as it maintains above this some upside might be seen. Technical indicators suggest slight bullish divergence can be seen on the charts.
On the trade setup, Kelly suggests trading the range on the cross, and further remains a seller around 0.7150.
While the trend for the pair remains tilted to the downside, Kelly awaits a push higher before EUR/GBP heads lower.
