EURUSD
- EUR/USD recovered and traded back above the 1.0900 level, experiencing a fresh bid in early European trading on Monday.
- The European Central Bank (ECB) revised its inflation projections lower. However, it maintained a hawkish stance, reiterating that future decisions would ensure policy rates remain at sufficiently restrictive levels "as long as necessary."
- ECB President Christine Lagarde's comments during the post-meeting press conference, where she stated that rate cuts were not discussed and emphasized the need to remain vigilant, provided a boost to the Euro.
- ECB policymaker Madis Muller mentioned on Friday that it was too early to declare victory over inflation and that discussions about lowering key rates were premature. Additionally, ECB Governing Council member Francois Villeroy de Galhau stated that none of the policymakers suggested rate cuts during the December policy discussions.
- The statements from Lagarde, Muller, and Villeroy de Galhau collectively underscore a consistently hawkish sentiment within the ECB. This has contributed to the Euro's bullish momentum against the US Dollar.
| SMA (20) | Slightly Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement:EUR/USD's rebound was fuelled by a hawkish tone from the ECB, which, despite revising inflation projections lower, emphasized the commitment to maintaining restrictive policy rates. Comments from ECB officials further supported the notion that rate cuts were not on the immediate agenda. This has allowed the Euro to gather strength against the US Dollar. The pair's future dynamics will likely continue to be influenced by ECB communications and economic data.
GBPUSD
- After reaching a fresh multi-month high near 1.2800 on Thursday, GBP/USD entered a consolidation phase, trading around 1.2750 early on Friday.
- Despite a deteriorating growth outlook and softening wage inflation in the UK, the Bank of England (BoE) refrained from adopting a dovish tone. The key interest rate was kept unchanged at 5.25%, and the BoE's policy statement reiterated that monetary policy is likely to remain restrictive for an "extended period of time."
- BoE Governor Andrew Bailey stated that it was too early to declare that interest rates have peaked.
- Data from the UK released on Friday indicated that business activity in the private sector continued to expand at an accelerating pace in early December. The S&P Global/CIPS Composite PMI rose to 51.7 from 50.7 in November.
- Despite the potential for a near-term correction, the overall bullish bias for GBP/USD remains intact. The pair's consolidation around the 1.2750 level indicates a pause in the upward momentum, and future movements will be influenced by economic data, especially concerning UK growth and inflation.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: GBP/USD experienced consolidation around the 1.2750 level after reaching a multi-month high. The Bank of England's decision to maintain a hawkish stance, emphasizing the need for restrictive monetary policy for an extended period, supported the Pound. Positive data on UK private sector activity further contributed to the pair's overall bullish bias, with potential for near-term corrections. The trajectory of GBP/USD will continue to be shaped by economic indicators and central bank communications.
GOLD
- Gold price (XAU/USD) regained positive traction on the first day of the week, maintaining modest intraday gains through the European session.
- Gold is poised to record its first annual increase since 2020. This trend is driven by a weaker dollar and increasing expectations for rate cuts in 2024.
- Investors are anticipating a series of rate cuts in the coming year, contributing to the positive outlook for gold. Rising political and economic uncertainty further positions gold as an attractive investment, creating a potential "sweet spot" for gold investors.
- Gold price is expected to continue finding support from the dovish pivot of the Federal Reserve. The US central bank affirmed expectations of rate cuts in the next year after maintaining interest rates in the range of 5.25% to 5.50%.
- Gold price booked a weekly gain but ended Friday in the red. Investors took profits off their long positions following an eventful week dominated by the Fed. Traders are gearing up for the upcoming US PCE inflation data, and thin trading conditions are anticipated.
Closing statement: Gold price experienced positive traction in the first week, securing its first annual increase since 2020. The outlook is buoyed by a weaker dollar, expectations of future rate cuts, and heightened political and economic uncertainty. The dovish stance of the Federal Reserve reinforces gold's appeal, with investors keeping a close eye on upcoming economic data and trading conditions.
CRUDE OIL
- West Texas Intermediate (WTI) oil price struggled to regain recent losses, hovering over $72 per barrel in the Asian market at the beginning of the week.
- Crude oil prices found support following a statement from Russian Deputy Prime Minister Alexander Novak. Russia is contemplating deepening oil export cuts in December, possibly by 50,000 barrels per day (bpd) or more, in a bid to bolster global oil prices.
- Adverse weather conditions in Russia added to the support for Crude oil prices. Moscow suspended approximately two-thirds of loadings from ports, impacting oil supply.
- The International Energy Agency (IEA) provided a bullish forecast, stating that global oil consumption is expected to increase by 1.1 million bpd in 2024. This optimistic outlook contributed to underpinning the WTI price.
- The US Dollar Index (DXY) experienced a nearly 4% weakening over the past two months. This decline in the dollar's strength could stimulate oil demand from other countries as oil becomes more affordable to purchase.
| SMA (20) | Falling |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: Crude oil prices faced challenges in regaining recent losses but found support from potential Russian export cuts, adverse weather conditions impacting supply, and a positive forecast from the IEA. Additionally, the weakening US Dollar further contributed to the supportive environment for oil prices, with ongoing developments in global geopolitics and economic conditions likely to influence oil market dynamics in the coming weeks.
DAX
- Upbeat economic indicators from China and policy measures by the People's Bank of China (PBoC) on Friday drove demand for riskier assets. Signs of improvement in Chinese industrial production and retail sales suggested a potential momentum shift in the Chinese economy.
- Despite positive global cues, preliminary private sector PMIs for December signaled a reversal in course for the DAX. Weaker German service sector activity pulled down the German Composite PMI from 47.8 to 46.7.
- The weak macroeconomic backdrop and forward guidance from the European Central Bank (ECB) on Thursday raised concerns about a potential recession in the euro area.
- On Monday, the German economy will be in focus with the release of the German Ifo Business Climate Index figures for December. Investor interest will be keen on any signs of improvement in sentiment toward current conditions and the economic outlook, which could support the buyer appetite for DAX-listed stocks.
- In addition to economic indicators, investors will closely consider commentary from the ECB. ECB Chief Economist Philip Lane and Executive Board member Isabel Schnabel are scheduled to speak on Monday, providing insights that could influence market sentiment and DAX trends.
| 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 faced a mixed week with positive momentum from global factors, especially China, countered by concerns over weak PMI data and ECB guidance. The focus shifts to German economic indicators and ECB commentary, as investors assess the potential impact on the DAX in the coming week.