After a revision of the monetary policy by the ECB, it was time for a long – awaited meeting of the FOMC. It took place last week and aroused a lot of market emotions. In line with market consensus, the interest rates were raised by 25 basis points. Nevertheless, the Fed announced another three hikes in 2017 (each of them by 25 basis points). The message turned out to be more hawkish than expected. As a result, dollar once again appreciated against other currencies. It should be noted that the Fed also tightened the monetary policy in December 2015 – it was the first hawkish decision for nine years. Moreover, another three or four interest rates hikes in 2016 were announced.

Certainly, the meeting of the ECB Governing Council was in the spotlight last week. The market consensus assumed that the bank would extend QE at 80 billion euros for another six months. In the meantime, the bond purchase program was extended for nine months, whereas its scope was cut to 60 billion euros per month. A reaction of the foreign exchange market was quite nervous. Originally, the decision was interpreted as the beginning of the QE limitation, whereas in fact, it turned out to be more dovish than expected. Over the next nine months the bank will supply a market with the amount of 540 billion euros – it will be more than 480 billion euros in six months.

Weekly comment MM Prime TFI  - December 12, 2016

Weekly comment M In the market’s opinion, a December interest rates raise by the FOMC is certain. In fact, this attitude is not unfounded – the latest macroeconomic data from the US once again confirmed the strength of the American economy. The readings of the annualized GDP growth (3.2%), the Chicago PMI (57.6 pts.) and the manufacturing PMI (54.1 pts.) turned out to be significantly higher than expected. What is more, data from the American labor market did not fail as well. The non-farm payrolls stood at 178K vs 175K projected and the unemployment rate amounted to 4.6% vs 4.9% expected. M Prime TFI  - December 5, 2016

Despite the facts that the American stock exchanges were closed on Thursday (Thanksgiving Day) and they were open shorter on Friday (Black Friday), their major indices ended last week in the green color – the DJI and the NASDAQ rose by 1.5% and the S&P500 increased by 1.4%. What is more, all of them reached their historical peaks. In Europe, the market sentiment was rather bullish as well. During the whole week, French CAC40 went up by 1%, German DAX soared by 0.3%, whereas British FTSE250 fell by 0.3%. Investors focused on the latest macroeconomic data readings, especially from the US. The dynamic of the durable goods orders stood at 4.8% m/m vs 1.5% expected.