MARKETS: Strong NFP raises prospects of December US rate hike

November data from the United States has followed a robust trajectory, and with employment picking up the Federal Rserve has been provided with a compelling reason to hike rates for the first time in almost ten years. Sentiment towards the Dollar remains bullish despite the post-ECB selloff, and USD strength may continue to take centre stage for the rest of 2015 as investors increase their bets on the Fed taking action during the December FOMC meeting.
Gold, which recently bounced from near six year lows of $1046.40, has declined, breaking through the $1062 level late Friday. The precious metal has continuously faced punishment from Dollar strength, and Friday’s strong employment report, which makes a valid case for a US rate rise, may install a fresh wave of selling momentum throughout metal trading. The direction of Gold continues to be dictated by US interest rate expectations and with expectations high that the Fed will likely raise US rates, sellers may be encouraged to attack this zero yielding metal back down towards $1,000.
Overall, the probability of a US rate hike in December has grown exponentially. With the long awaited FOMC press conference only a few weeks away, the USD may continue to appreciate through the global currency markets.
All this said, the Fed’s credibility is currently on the line. If the central bank fails to raise rates in December even after the emphasis on the importance of US data, it may end up in the same category as the ECB which over promises, but under delivers.

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