EURUSD
- EUR/USD is engaged in a battle around the 1.0900 level in European trading hours on Thursday. The pair experienced a substantial rally of over 100 pips following the Federal Reserve meeting.
- As anticipated, the Federal Reserve decided to keep interest rates unchanged during the meeting. The key takeaway from the meeting was the indication by policymakers that they foresee multiple rate cuts in 2024. This insight influenced the dynamics of EUR/USD.
- The European Central Bank (ECB) is scheduled to announce its decision today. Market expectations lean towards interest rates remaining unchanged for the second consecutive meeting.
- ECB President Christine Lagarde will hold a press conference, and updated staff macroeconomic projections will be released. A downgrade in inflation and growth forecasts is expected.
- The focus now shifts to the ECB's actions in the coming year. Market sentiment appears dovish, with a rate cut already factored in for the April meeting. This expectation has been applying downward pressure on the Euro. Thursday's meeting is likely to provide further clarity and insight into the ECB's stance and potential policy moves for 2024.
| SMA (20) | Slightly Rising |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement:EUR/USD is currently navigating the aftermath of the Federal Reserve meeting and is poised for potential volatility surrounding the ECB decision. Attention will be on any signals from the ECB regarding its policy trajectory in 2024, particularly in response to economic challenges. The meeting outcomes are expected to guide traders in repositioning for the future.
GBPUSD
- GBP/USD is holding onto substantial gains above the 1.2600 level in early Europe on Thursday. The pair has displayed resilience despite recent economic challenges.
- The Office for National Statistics (ONS) reported on Wednesday that the UK's Gross Domestic Product (GDP) contracted by 0.3% on a monthly basis in October. This economic contraction has added pressure to the Pound Sterling.
- Other data from the UK indicated a decline in Industrial Production by 0.8% and Manufacturing Production by 1.1% on a monthly basis. These figures underscore the economic headwinds faced by the UK.
- In the final meeting of 2023, the Bank of England (BoE) is expected to maintain its key interest rate unchanged for a third consecutive meeting. The decision, due today, will be closely monitored for any nuanced signals regarding the central bank's policy stance and considerations for the future.
- Following the Federal Reserve meeting, attention in the US will shift back to economic data. Notable reports, including the weekly Jobless Claims and Retail Sales, are scheduled for release on Thursday. These indicators will provide insights into the health of the US economy.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement: GBP/USD is navigating economic challenges in the UK, with attention on the Bank of England's decision. The pair's resilience will be tested amid concerns about economic contraction. Additionally, the US economic data post the Federal Reserve meeting will influence trading dynamics, making it a pivotal week for GBP/USD traders.
GOLD
- Gold price is attracting follow-through buying for the second consecutive day on Thursday. After hovering near three-week lows of $1,973 on Wednesday, Gold witnessed a substantial $50 turnaround in American trading.
- The upsurge in Gold was primarily propelled by a dovish shift in the Federal Reserve's monetary policy outlook for 2024. Despite holding policy rates steady within the 5.25%- 5.50% target range, Fed Chair Jerome Powell conveyed a dovish outlook, suggesting a rate cut as the next policy move due to concerns over the economic outlook.
- Powell emphasized the Fed's focus on avoiding the mistake of keeping rates too high for too long, fostering expectations of over 100 basis points of rate cuts in the coming year. Odds of a reduction in March and May are estimated at 87% and 100%, respectively.
- With the major event risks from the United States now addressed, attention shifts toward the policy decisions from the Bank of England (BoE) and the European Central Bank (ECB).
- Gold remains in a favorable position as major global central banks return to policy normalization and inflation concerns ease.
Closing statement: Gold has experienced a significant rebound driven by the dovish stance of the Federal Reserve. Powell's remarks have set the stage for potential rate cuts, enhancing Gold's appeal. As attention turns to policy decisions from other central banks, Gold remains well-positioned in a scenario of ongoing global policy normalization and easing inflation concerns.
CRUDE OIL
- West Texas Intermediate (WTI) prices appear set to extend gains for the second consecutive day, trading higher around $70.00 per barrel during the Asian session on Thursday.
- Crude oil prices gained momentum following the release of the US Energy Information Administration's (EIA) Crude Oil Stocks Change for the week ending on December 8. The data showed a withdrawal of 4.259 million barrels, significantly exceeding the expected withdrawal of 0.65 million barrels.
- The WTI price experienced an uptick in the aftermath of the Federal Reserve (Fed) meeting, where market expectations are now leaning towards three rate cuts for 2024.
- Fed Chair Jerome Powell's dovish stance has fueled sentiments that lower interest rates can reduce borrowing costs, potentially boosting economic growth and, consequently, oil demand.
- A warning from Yemeni Houthi forces, advising ships to avoid traveling to Israel, adds a geopolitical element that might have impacted crude oil prices. Geopolitical tensions often introduce uncertainties that can influence oil markets.
| 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: WTI prices are on a positive trajectory, supported by a favourable EIA Crude Oil Stocks Change, dovish signals from the Fed, and geopolitical considerations. The dynamics of oil demand, influenced by economic growth expectations and geopolitical developments, will likely continue to shape the direction of crude oil prices in the coming days.
DAX
- The DAX continues to achieve new All-Time Highs (ATH), reaching around 16969 in the latest rally.
- On Wednesday, Eurozone industrial production figures were released, indicating a more significant decline than expected in October. Production fell by 0.7%, surpassing the 1.0% decline recorded in September.
- Following the European closing bell on Wednesday, the Federal Open Market Committee (FOMC) interest rate decision attracted investor interest. As anticipated, the Fed opted to keep interest rates unchanged. However, dovish FOMC projections supported the appetite for riskier assets among buyers.
- On Thursday, attention shifts to the European Central Bank (ECB). Market expectations are for the ECB to maintain interest rates at 4.5%. While an unchanged interest rate decision might be anticipated, the ECB press conference will be the focal point.
- Investors will closely scrutinize the ECB press conference for insights into inflation and economic projections for 2024. Forward guidance on monetary policy, particularly any hints on the possible timing of a first ECB rate cut, would be crucial for the DAX. Current expectations for a rate cut range between Q1 and Q2 of 2024.
| 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's journey to record highs is accompanied by considerations of Eurozone industrial production, the dovish stance of the FOMC, and the impending ECB decisions. As the ECB provides guidance on its monetary policy and future rate decisions, this information will be instrumental in shaping the trajectory of the DAX in the coming week.