Fed Will Join Hands In The Turbulent Political Situation In Greece. How Will The Market Be Interpreted This Week?

Judging from the news, the Japanese election last weekend has taken the lead in igniting the stock market in the early days of the week, and the victory of Andouble's ruling coalition led the US dollar to the yen early Monday with a profit taking trend.

And in mid week, the Fed's December interest rate resolution will undoubtedly become the focus of attention of the market.

Many traders believe that

Then we will say goodbye to "quite a long time" and offer a Christmas gift to the market.

Of course, behind the focus of this market, investors should not forget the risk point of Greek presidential election. "European debt crisis 2" may still be a wake-up call.

The election of the Japanese House of Representatives, which has attracted much attention, came to an end on 14 December. Eventually, the ruling coalition led by Prime Minister Abe Shinzo won the overwhelming majority of seats.

However, the low turnout allowed Andouble to win.

According to Broadcasting British Corporation website reported on December 15th, the ruling Liberal Democratic Party and Komeito party jointly won 325 seats, exceeding 2/3 of all 475 seats (317 seats).

Japan's NHK said that the Liberal Democratic Party received 290 seats and the Komeito party gained 35 seats, which means that the new government will implement its policies more easily.

The main opposition Democrats only got 73 seats, though 11 more than the previous congress.

In this election, 1191 candidates competed for a total of 475 seats in the house of Representatives.

According to the Japanese electoral system, the Japanese House of Representatives election will decide which party will be in power in the next four years, and according to convention, the head of the ruling party of Japan will automatically become the Prime Minister of Japan.

Therefore, the 14 day election of the house of Representatives has actually become the prime minister's election in Japan.

Andouble's Liberal Democratic Party and friends party Komeito gained more than 2/3 of the "absolute majority" needed to enable them to successfully pass various bills in Congress.

But the turnout is at a record low, indicating that the public is generally not satisfied with its performance.

For the election results, there are analysts believe that the Japanese Prime Minister Abe Shinzo (LDP president) to rebuild the foundation of the regime's strategy has been successful for the time being.

When the opposition party was ready to dissolve the house of Commons, the short term combat strategy which was shorter than the date of issuing the election announcement, and the initiative to put forward the merits and demerits of the "Andouble economics" put forward by itself, the focus of the argument was effective in this election.

On the market side, the US dollar opened low in the morning on the first day of the day, and the Nikkei 225 index also dropped sharply by 2.40%.

Insiders said that after Andouble won the election, the US dollar against Japanese yen did not rise as some people expected, as investors lifted the long positions established last Friday.

Last week's low 117.44 was the next support.

Federal Reserve resolution midweek detonated, "quite a long time" will be a thing of the past?

Looking forward to this week, the FED's last monetary policy meeting in 2014, which will be held from Tuesday to Wednesday (December 16-17), is undoubtedly the biggest focus of the current market.

The market has generally believed that the US Federal Open Market Committee (FOMC) should cancel the "long term" statement of the ultra low interest rate guidance as soon as the US economic recovery accelerates and the employment market continues to improve.

Federal Reserve Chairman Yellen (JanetYellen) will hold a press conference later.

In view of the unusually strong non-agricultural data, some international executives believe that the FOMC will give up the promise of "zero interest rate" for a long time.

The Federal Reserve has kept overnight lending rates at near zero levels since December 2008.

The unemployment rate in the United States has dropped to the level of 6.5% below the Federal Reserve in April. It is now at a low of six for 5.8% years, even though more people have joined the workforce.

The assets purchase plan of the Federal Reserve ended in October, and there was only one meeting at that month.

The voting Committee disagreed with the phrase "fairly long term".

JonHilsenrath, known as the WSJ of the Federal Reserve's "news agency", has recently written that the Federal Reserve will adjust interest rates to nearly zero levels. "JonHilsenrath"

The article shows: "Fed officials are seriously considering a major change in policy keynote at next week's meeting: abandoning the promise that short-term interest rates will maintain low interest rates over a longer period of time, because they are more confident in raising interest rates around the middle of next year."

Analysts pointed out that once the phrase "for a long time" was abandoned, from the history of the policy formulation conference, it implied that the Fed would guide investors to the ultimate interest rate increase through a series of incremental words to avoid market turbulence.

In terms of the market, if the Fed really changes the wording, it may be hard to avoid a weaker gold price.

The United States will pay attention to industrial output in November, report on international capital flows in October, November CPI and the Fed's interest rate resolution, the report said.

The report says Morgan Stanley economists expect the fed to abandon the phrase "quite a long time" in the December monetary policy statement.

Earlier, some hawkish remarks and strong US economic data boosted the US dollar.

The US bulls are already in high position and there may be room for callbacks by the end of the year.

However, it is suggested that any chance of a fall in the US dollar can be regarded as an opportunity to buy.

In the future, the US dollar's rise is not caused by the Fed's interest rate rise, but a sustained strong economy in the US.

In addition, UBS analysts DrewMatus and MauryHarris also said that December is likely to be the best time for the fed to delete "quite a long time"; if the Fed insists on its timetable and avoids market surprises, it needs to delete any statements that might be interpreted as supporting market expectations.

Although the Fed's resolution is eye catching, this week's Greek elections may also be another trigger for the market's "runaway" market.

The Greek parliament will hold the first round of voting in the three rounds of presidential elections on Wednesday (December 17th). Eight independent members said this week they were ready to support Samaras, the former presidential candidate of the European Union (StavrosDimas), who was nominated by President Dimas.

Samaras will need to win more than 180 votes in 300 seats (with more than 17 votes from the opposition party) to achieve his goal of selecting the head of state.

For the euro zone, which is suffering from deflation risk, "another straw on Camel" appears.

Last week, Greece's political uncertainty made the country's biggest weekly decline since 1987, making it the second worst performing market after Russia.

Russia's RTS index has the worst performance, and has fallen by 44% so far.

This rout has extended to Greek bonds. Last Thursday (December 11th), Greek 3-5 year bond prices jumped to the highest level since the debt restructuring in 2012.

The trigger for a series of reactions in the market is the trend of Greece's political situation.

Greek Prime Minister Samaras announced last Tuesday that he would advance the presidential election scheduled for next February 15th to December 17th.

Once Samaras's presidential candidate is not elected, it will probably lead to the Syriza.

As far as the present situation is concerned, the government does not have enough votes.

On the contrary, polls show that Syriza, the left-wing party, has the highest popularity among the public.

If Syriza is successfully elected as the ruling party, there will be a significant change in the policy direction of Greece.

The party supports the abandonment of aid agreements that have been negotiated with international agencies.

This will undoubtedly bring down the price of Greek bonds and drive the yield up, triggering a new round of European debt crisis.

It is worth noting that Syriza is extremely resistant to the "three carriages" (European Union, the European Central Bank and IMF) providing relief loans (along with harsh fiscal tightening conditions), claiming that the government should regain sovereignty.

However, Greece now has more than 8% interest on lending in the private market, which is more than 7 times the interest rate of the rescue loan, and it is difficult to increase the expenses. Therefore, this assumption is inevitably a fear for the market.

Greece has been living on international aid loans since 2010, with a loan amount of up to 240 billion euros.

The price of Greece is also huge, and the Greek people have to suffer from fiscal tightening. The Greek government has repeatedly raised taxes to reduce pensions and salaries.

Greece's current round of aid plans should expire at the end of 2014. Greece and the "three carriages" have been negotiating for several weeks on the Greek budget for 2015, but the two sides have reached deadlock on the scale of the reduction in 2015 and the negotiation of further economic reform.