EURUSD
- EUR/USD pauses after a two-day winning streak as market participants brace for crucial monetary policy decisions scheduled for Wednesday and Thursday from the United States and the Eurozone, respectively.
- The US Dollar initially experienced a decline following the release of the US Consumer Price Index (CPI). However, it recovered ground later on. The CPI data met expectations, showing a 0.1% rise in November, and the annual rate slowing to 3.1%.
- The spotlight is on the Federal Reserve, set to announce its decision on Wednesday. In the final meeting of 2023, the central bank is widely anticipated to maintain interest rates at their current levels.
- Investors are keenly watching Chair Jerome Powell's remarks, expecting a cautious tone that neither signals rate cuts nor a victory on inflation. The dot plot, revealing FOMC staff projections for 2024, will be closely scrutinized for insights into the Fed's future policy stance.
- Thursday brings the European Central Bank (ECB) decision. While no change in policy is expected, this event carries significance as it could potentially influence market expectations. Even if it turns out to be a non-event, subtle cues from the ECB could impact sentiment in the currency markets.
| SMA (20) | Slightly Rising |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Falling |
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Closing statement:EUR/USD traders are navigating a pivotal week marked by central bank decisions on both sides of the Atlantic. The delicate balance between inflation concerns and policy responses will likely set the tone for the pair's movement in the coming days.
GBPUSD
- GBP/USD continues to trade in negative territory below the 1.2530 level in early Wednesday trading, indicating persistent bearish sentiment.
- The UK releases data showing a contraction of 0.3% in Gross Domestic Product (GDP) on a monthly basis, putting downward pressure on the Pound Sterling. This economic contraction raises concerns and contributes to the bearish tone for the British Pound.
- Investor attention is focused on upcoming data releases, particularly the UK monthly GDP and Industrial Production figures expected to show a 0.1% decline in October. These figures will provide further insights into the economic health of the UK and could influence market sentiment toward the British Pound.
- While the Bank of England (BoE) is expected to maintain its current policy stance this week, the market is sensitive to indications from policymakers. Soft wage inflation readings could be viewed favorably by policymakers who are concerned about robust pay growth hindering efforts to bring inflation back to the 2% target.
- In the North American session, market participants eagerly await the release of the US Producer Price Index (PPI) and the Federal Reserve's (Fed) Interest Rate Decision. These events have the potential to significantly impact GBP/USD, with the Fed's decision and accompanying statements being of particular interest to traders.
| SMA (20) | Rising |
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| RSI (14) | Neutral | ||
| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD faces a mix of domestic economic challenges and external influences. The interplay of UK economic data, Bank of England policy cues, and developments on the US front will likely determine the pair's trajectory throughout the week. Traders will closely monitor each release for cues on the currency's near-term direction.
GOLD
- Gold is currently challenging bullish commitments, hovering near the lowest level in three weeks around $1,975. The precious metal faces a crucial juncture as it navigates market dynamics.
- Gold's price appears vulnerable in Wednesday’s trading, with investors refraining from making significant moves ahead of a pivotal event later in the week—the Federal Reserve's (Fed) interest rate decision and policy outlook.
- Recent Consumer Price Index (CPI) data showed a marginal increase of 0.1% last month, following no change in October. Annually, the CPI rose 3.1% in November, slightly down from the 3.2% recorded in October. This data has implications for the Fed's decision-making process and, consequently, for gold.
- The market is currently pricing about 43% odds of a Fed rate cut in March 2024, and the probability increases to around 75% for May. The Fed's stance on interest rates and its outlook for the economy will significantly influence gold's direction.
- Should Federal Reserve Chair Jerome Powell and colleagues dismiss expectations of a rate cut in Q1 2024, citing elevated inflation levels and a still-tight labor market, the non-interest-bearing gold price could experience renewed selling pressure as demand for the US Dollar returns.
Closing statement: Gold is at a critical juncture, facing both short-term technical challenges and the impending influence of the Federal Reserve's decision. Traders are cautious, and the precious metal's direction will likely be shaped by the outcome of the Fed's meeting and the signals it provides for the future path of interest rates.
CRUDE OIL
- West Texas Intermediate (WTI) crude oil prices continue their descent, amplifying losses in the wake of the US inflation data release for November. The crude oil market is currently navigating a complex set of dynamics.
- The dynamics influencing oil prices are many-sided. The recent downward pressure on crude prices is partly a response to expectations of the Federal Reserve maintaining its current policy stance. This reflects concerns in the market about a potential slowdown in economic growth due to prolonged higher interest rates.
- The US Energy Information Administration (EIA) has adjusted its outlook, increasing the 2023 supply estimate by 300,000 barrels per day (bpd) to 12.93 million bpd. This adjustment reflects an evolving perspective on oil production in the United States (US) and contributes to the overall market sentiment.
- The effectiveness of the OPEC+ output cut agreement in controlling supplies faces challenges. The increased forecast for US oil supply in 2023 adds another layer to the evolving market dynamics, impacting the equilibrium between demand and supply.
- Geopolitical tensions, notably the recent attack on a commercial tanker, elevate the risk of supply disruptions in the Middle East. These events add an element of uncertainty to the oil market, contributing to its overall volatility.
| SMA (20) | Falling |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: Crude oil is experiencing a notable decline, influenced by a mix of global economic concerns, adjustments in supply forecasts, and geopolitical tensions. The market remains dynamic, and traders are closely monitoring developments, especially regarding the Fed's policy decisions and any geopolitical events that could impact the oil supply chain.
DAX
- On Tuesday, the ZEW Economic Sentiment indicators for both Germany and the Eurozone surprised the markets. The German ZEW Economic Sentiment indicator exhibited an unexpected climb from 9.8 to 12.8 in December, surpassing economists' forecasts of a decline to 8.8.
- German wholesale prices reported earlier in the session contributed to expectations of a less hawkish European Central Bank (ECB) rate trajectory. Wholesale prices recorded a year-over-year decline of 3.6% in November, compared to a 4.2% decrease in October.
- The US Consumer Price Index (CPI) Report on Tuesday had a notable impact on buyer demand for DAX-listed stocks. Sticky inflation numbers for November eased market expectations of a Q1 Federal Reserve rate cut, influencing investor sentiment.
- Wednesday's focus turns to new loan data from China, which will draw investor interest. A significant increase in new loans could alleviate concerns about demand. However, any news indicating progress toward a stimulus package in Beijing would likely have a more substantial impact.
- Eurozone industrial production figures are another key point of interest. Weaker-than- expected numbers could fuel speculation about a more dovish stance from the ECB. Economists are anticipating a decline of 0.3% in industrial production for October following a 1.1% fall in September.
| SMA (20) | Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement:The DAX is navigating a landscape influenced by economic sentiment indicators, inflation data, and global factors. Surprises in economic indicators, coupled with international developments, will continue to shape investor sentiment. Attention is particularly on developments in China and Eurozone industrial production figures, impacting expectations regarding central bank policies.