There has been a massive chaos in the global market from the very beginning of the year 2016.The FED was supposed to hike their interest rate in the very early in this year but due to a constant poor performance from their economy they delayed their decision. However, things have been dramatically changed in the global market since the U.S economy has been doing pretty well for the last couple of months and showing significant improvement in the finical sectors. The U.S government has added more jobs to their private and public sectors and the average hourly income of the people has been increased significantly in the last couple of months. The market was suffering from an extreme level of indecision due to U.S presidential election and the overall sentiment was extremely negative for the U.S dollar for Mr. Trump reign before the election. However, things have dramatically changed and the green bucks have gained immense strength in the market after Mr. Trump won the presidential election. In his victory speech, he declared about the tax cut and increased plan for fiscal spending. Such a promising statement from the U.S president has helped the green bucks to recover its loss to a great extent. After the US prudential election, the dollar became broadly stronger against its major rivals in the market. On the current strength of the U.S dollar, the price of gold has significantly dropped in the global market. The precious metal, gold is priced in U.S dollar and such a strength of the green bucks will make the holding of the gold difficult for the investors of other currencies. Last week the gold price broke a major psychological level in the market and investors are fear since the price of gold might fall further if the FED hike their interest rate in the month of December.
The ongoing energy crisis in the financial world is increasing day by day. The number offshore and other oil drilling rigs have been producing massive oils which have lowered the price of oil in the financial market. Investors are in fear the price of oil might fall further if OPEC fails to take the proper initiative. In the upcoming OPEC meeting, there is a strong chance that the OPEC will limit the production of oil to 33-32.5 million barrels per day. But due to the ongoing conflict between the major policy makers of the OPEC organization, there remains a strong confusion about the implementation of this program. The price of gasoline has also dropped to a significant amount in the market .The leading energy manufacturer is cautiously waiting for the OPEC meeting since the energy market is extremely unstable at the current moment. On the contrary, Canada is shifting to eco-friendly power production within 2030 and they will reduce the use of coal to a great extent in the near term future. This will be an easy task for the Canadian government since they are production more than half of their electricity from waterfalls. On the contrary, the US government is using 10 % coal in their total power production so they will have a tough time in their energy production if the energy market remains unstable for a prolonged period of time. The recent implementation of the 276-day policy by the Chinese government has also created some sort of stability in the energy market since the price of cooking coal has been increased in the recent days. Cooking is one of the major ingredients in electricity production. So if the FED hike their interest rate then all the leading energy manufacturer will limit their production of oil to a certain extent and the world economy will gradually stabilize.
The month of December is going to be the most important month for the year 2016.according to the FED rate hike monitor tools there is 91.3% chance that the FED will hike their interest rate in the month December. If FED comes up with a hawkish hike in the month of December the current strength of the green bucks will sustain for a long period of time. With an imminent rate hike in the market, most of the leading investors are carefully planning their next step to make a decent profit in the market in the event of this program. On the other hand, Mr. Trump will do all the possible things within his capability to ensure the positive confidence of the consumers in his country. As a newly elected president, he has already taken huge steps to cut down the taxes and increased the fiscal spending. Though this will strengthen the U.S dollar initially but the leading economist fear that the U.S will face an extreme financial crisis in the next year if their performance declines. Most of the economic researchers think that in order to sustain the current strength of the U.S dollar the FED will need another rate hike in the next year. But increasing the interest rate for consecutive two ears will be an extremely difficult task for the FED. They need to improve the average hourly income of the U.S citizen and ensure a strong positive consumers’ confidence in the market. Considering all the facts the overall bias remains strongly positive for the green bucks. Upon the rate hike in the month of December, the green bucks are going to dominate the all the major currency pairs in the forex market for a prolonged period of time. In the eyes of trained professional, it’s better to support the green bucks as investors until the strength fades away in the market.