EURUSD
- The EUR/USD pair is heading into the daily close around the 1.0950 level, marking a third consecutive day in the red.
- On the first trading day of 2024, the pair experienced a decline of approximately 90 pips. This decline was attributed to the US Dollar benefiting from a souring market mood, driven by macroeconomic data indicating persistent economic contraction at the end of 2023.
- S&P Global released the December Manufacturing PMIs for both the Eurozone and the United States (US). The EU index was reported at 44.4, a slight improvement from the previous 44.2. In contrast, the US index contracted from the previous 48.2 to 47.9.
- The macroeconomic calendar is packed with relevant data, starting with the release of the December US ISM Manufacturing PMI and the Federal Open Market Committee (FOMC) Meeting Minutes on Wednesday.
- Chairman Jerome Powell's recent statement about rate cut analysis being around the corner makes the release of the FOMC Meeting Minutes particularly interesting. Traders will be keen to see if policymakers officially discussed rate cuts.
| SMA (20) | Rising |
|
|
| RSI (14) | Falling |
|
|
| MACD (12, 26, 9) | Slightly Falling |
|
Closing statement: EUR/USD faces a third consecutive day in the red, influenced by a souring market mood and indications of economic contraction. The upcoming release of the December US ISM Manufacturing PMI and FOMC Meeting Minutes will be crucial, especially in the context of Chairman Powell's recent comments on potential rate cuts.
GBPUSD
- GBP/USD has rebounded after experiencing losses in the previous three successive sessions. The pair is currently trading higher, nearing 1.2630.
- The rebound in GBP/USD is occurring amid a stable US Dollar (USD). The USD could face downward pressure again, especially with moderate comments from the International Monetary Fund (IMF) Managing Director Kristalina Georgieva.
- In an interview with CNN on Tuesday, IMF Managing Director Georgieva expressed optimism about the US economy. She advised Americans to "cheer up," which could contribute to a more favorable environment for currencies against the USD.
- The Pound Sterling (GBP) is facing selling pressure due to the negative outlook on the British economy. The Institute of Directors' Economic Confidence Index survey revealed a continued decline in optimism among British directors about the country's economy for the next 12 months. The index dropped to 28 in December from the previous month's decline of 21.
- S&P Global's commentary has added to concerns, stating that UK manufacturing output contracted at an accelerated rate at the close of 2023. This contraction in manufacturing output could be contributing to the negative sentiment surrounding the British economy.
| SMA (20) | Slightly Rising |
|
| RSI (14) | Slightly Falling |
|
| MACD (12, 26, 9) | Slightly Falling |
|
Closing statement: GBP/USD is rebounding after a series of losses, with a stable US Dollar and optimism expressed by the IMF Managing Director about the US economy. However, the negative outlook on the British economy, as indicated by economic confidence surveys and manufacturing output data, is exerting selling pressure on the Pound Sterling.
GOLD
- Gold price had a positive start to 2024, testing the $2,080 barrier in the first half of Tuesday's trading session. However, it experienced a sharp reversal, settling below $2,060 later in the day amid a solid uptick in the US Dollar.
- Gold price is trying to bounce above $2,060 early on Wednesday, replicating the move observed in the Asian session on Tuesday. The dynamics of the precious metal are influenced by both the US Dollar's movements and broader market sentiment.
- The US Dollar (USD) showed strength, leading to a decline in gold prices. Despite market risk aversion, the USD struggled to sustain its previous uptick.
- Investors remain cautious, eagerly awaiting the Minutes of the US Federal Reserve's (Fed) December meeting and the JOLTS Job Openings data. These releases are anticipated to provide insights into the prospects of interest rate cuts later in the year.
- Tsunami warnings and multiple high-magnitude earthquakes in Japan are also contributing to investor unease. However, the impact of these natural events on the market has been limited so far.
Closing statement: Gold is exhibiting volatility, with a positive start followed by a sharp reversal driven by the US Dollar's strength. Investor caution prevails as they await key data releases and minutes from the Fed's December meeting. Geopolitical factors, including seismic activity in Japan, are adding to the overall market uncertainty.
CRUDE OIL
- West Texas Intermediate (WTI) price is trading around $70.10 per barrel during the Asian session on Wednesday. However, it faced challenges in the previous session amid diminishing market expectations for Federal Reserve (Fed) rate cuts.
- The WTI price encountered difficulties as expectations for Fed rate cuts diminished. Changes in monetary policy, especially from major central banks like the Fed, can influence market sentiment and impact commodities like crude oil.
- Despite potential supply disruptions following a naval clash in the Red Sea, crude oil prices are facing challenges. Geopolitical events, such as clashes in key oil transit areas, typically introduce volatility to oil prices.
- Downward pressure on crude oil prices is rooted in concerns over the deceleration of global economic growth. Worries about heightened oil supply in the first half of 2024, particularly from producers outside the Organization of the Petroleum Exporting Countries and its allies (OPEC+), are contributing to this pressure.
- The market is closely monitoring the upcoming release of the US Energy Information Administration (EIA) Crude Oil Stocks Change and the American Petroleum Institute (API) Weekly Crude Oil Stock data for the week ending on December 29. These reports provide insights into the inventory levels and can influence crude oil prices.
| SMA (20) | Falling |
|
|
| RSI (14) | Falling |
|
|
| MACD (12, 26, 9) | Slihgtly Falling |
|
Closing statement: Crude oil prices are navigating challenges, influenced by changes in market expectations for Fed rate cuts, geopolitical events, and concerns about global economic growth. The upcoming data releases on crude oil stocks will be crucial in determining near-term price movements. prices.
DAX
- Yesterday, the Euro area manufacturing sector was in focus. Upward revisions to preliminary survey-based results failed to provide comfort. The Eurozone Manufacturing PMI rose from 44.2 to 44.4. A reading below 50 reflects a contraction in the sector, signaling challenges in the manufacturing landscape.
- Better-than-expected Caixin Manufacturing PMI from China delivered early support. However, the impact of the China NBS Manufacturing PMI from the weekend continued to resonate in the market. Manufacturing data from major economies, especially China, can have a significant impact on global indices like DAX.
- Today, the German economy will remain in the spotlight, with a focus on German labor market numbers. Weaker-than-expected unemployment figures could fuel concerns about a potential economic downturn in Germany. The German economy, being a key player in the Eurozone, often influences the performance of the DAX.
- Later in the Wednesday session, JOLTs Job Openings and Job Quits data will draw interest. These indicators provide insights into the US labor market, and developments in the US economy can have a ripple effect on global markets.
- Investors must also be mindful of the Federal Open Market Committee (FOMC) Meeting Minutes, which are scheduled to be released after the European closing bell. The minutes can provide insights into the Fed's thinking regarding monetary policy and economic conditions.
| SMA (20) | Rising |
|
|
| RSI (14) | Slightly Falling |
| |
| MACD (12, 26, 9) | Slightly Falling |
|
Closing statement: The DAX is influenced by a combination of Eurozone economic data, global manufacturing trends, German economic health, and developments in major economies like the US. Key indicators and events, including labour market data and FOMC Meeting Minutes, will shape investor sentiment.