EURUSD
- EUR/USD is making an attempt to extend its gains for the second consecutive session, hovering around 1.0930 during the Asian hours on Tuesday.
- The pair found support above the 20-day Simple Moving Average (SMA) and climbed above 1.0900. This move occurred on a relatively quiet Monday in the markets, with mixed performance for the US Dollar.
- The Eurozone is set to release the final November inflation reading. Market expectations are not anticipating surprises, with the annual Consumer Price Index (CPI) expected to be at 2.4%. The slowdown in inflation and a deteriorating economic outlook in the Eurozone have increased expectations that the European Central Bank (ECB) may be among the first central banks to start cutting interest rates.
- The market's attention is on the ECB's policy stance, given the economic challenges in the Eurozone. Expectations of a dovish approach from the ECB, including potential rate cuts, are influencing the EUR/USD pair.
- A key report in the US is due on Friday, featuring the Core Personal Consumption Expenditures (PCE) Price Index. This index is the Fed's preferred inflation gauge, and its outcome could significantly impact market sentiment and the direction of the EUR/USD pair.
| 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 is navigating through a relatively quiet market, finding support, and attempting to extend gains. The focus remains on Eurozone inflation data, ECB policy, and the upcoming US inflation report, all of which could contribute to shaping the direction of the pair in the coming week.
GBPUSD
- GBP/USD lost nearly 100 pips on Friday but still managed to post weekly gains of more than 1%.
- Markets remained relatively calm on Monday, characterized by the absence of high importance data releases.
- Investors are anticipating the Bank of England (BoE) to cut interest rates multiple times in the coming year. This expectation is driven by the recent drop in annual inflation to 4.6% and the decline in the estimate of annual earnings growth from 8% to 7.2%.
- On Wednesday, the UK's Office for National Statistics is scheduled to release Consumer Price Index (CPI) data for November. This release will be closely watched for insights into inflation trends in the UK.
- BoE policymaker Ben Broadbent expressed that, in the current uncertain situation, it is premature to conclude that the labor market is cooling. He emphasized the need to see a steeper and more ongoing slowing of pay growth before declaring that the battle against wage inflation has been won.
| 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 faced a decline on Friday but managed to secure weekly gains. The market is currently characterized by relative calmness, and attention is turning to the upcoming release of UK CPI data and the broader economic outlook, especially in the context of expectations regarding potential BoE rate cuts in the near future.
GOLD
- Gold price (XAU/USD) is facing challenges in capitalizing on the positive movement from the previous day. The metal is trading with a mild negative bias as the market enters the European session on Tuesday.
- Several influential Federal Reserve (Fed) officials have recently attempted to push back against market expectations for early interest rate cuts in 2024. This communication from the Fed officials has influenced the sentiment around gold.
- The prevailing sentiment across global equity markets is tilted toward risk-on, which is considered a factor undermining the appeal of safe-haven assets like gold.
- Worries about a deeper global economic downturn, particularly in key regions like China and the Eurozone, are seen as supporting factors for gold. In times of economic uncertainty, gold is often sought as a safe-haven investment.
- Traders are exercising caution and refraining from aggressive bets as they await a key US inflation reading (PCE) scheduled for Friday. Inflation data can significantly impact the outlook for interest rates and, consequently, influence gold prices.
Closing statement: Gold is navigating a complex landscape, facing both headwinds and tailwinds. The tug-of-war between factors such as Fed communications, global economic concerns, and the overall risk sentiment is contributing to the cautious trading environment for gold. Traders are likely to closely monitor upcoming economic data, especially the US inflation reading, for further cues on the precious metal's trajectory.
CRUDE OIL
- West Texas Intermediate (WTI) price is grappling to extend its gains for the second successive day, hovering around $72.80 per barrel in the Asian trading hours on Tuesday.
- Crude oil prices are finding support from geopolitical disruptions affecting trade and supply costs. An attack by the Houthi militant group on commercial vessels near Yemen has heightened concerns and added to the upward pressure on oil prices.
- Yesterday, a Norwegian commercial vessel was targeted in the Red Sea, leading to the temporary halt of all transit through the waterway by major oil company British Petroleum. This incident has prompted leading shipping firms to consider avoiding the Suez Canal, raising concerns about disruptions to oil shipments.
- The decision by Russia to extend cuts of 50,000 barrels per day (bpd) is playing a role in supporting and bolstering Crude oil prices. Supply adjustments by major oil- producing nations can have a significant impact on the global oil market.
- United States officials have revealed efforts to urge shippers to provide more information about their dealings with Russian oil. This initiative aims to strengthen the enforcement of sanctions, adding an additional layer of complexity to the oil market dynamics.
| SMA (20) | Falling |
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| RSI (14) | Rising |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: Crude oil is navigating a complex landscape marked by geopolitical tensions, supply concerns, and regulatory efforts. The recent incident in the Red Sea and ongoing efforts to enforce sanctions contribute to the uncertainties in the oil market. Traders will likely closely monitor developments in the geopolitical sphere and any regulatory changes that could impact oil supply and prices.
DAX
- Yesterday, German business sentiment figures for December surprised the markets. The Ifo Business Climate Index unexpectedly fell from 87.2 to 86.4 in December. The contrasting outlooks across German sectors signaled an uncertain economic outlook, impacting market sentiment.
- FOMC member Austan Goolsbee discussed the market reaction to the Fed projections and press conference. Loretta Mester noted that the markets had mistakenly bet on a quick return to policy normalization, emphasizing the challenges in predicting the central bank's moves.
- Better-than-expected US housing sector data failed to fuel the buyer appetite for DAX- listed stocks. The NAHB Housing Market Index climbed from 34 to 37 in December. Despite positive data, it appears that market dynamics and global sentiment play a crucial role in DAX performance.
- On Tuesday, finalized Eurozone inflation figures for November warrant investor attention. Inflation data is a key indicator, and unexpected changes can influence market perceptions of economic conditions in the Eurozone.
- Investors must monitor ECB commentary throughout the day. ECB Executive Board members Andrea Enria and Frank Elderson are scheduled to speak on Tuesday. Central bank communications can provide insights into policy considerations and the economic outlook.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Falling |
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Closing statement:The DAX is navigating a landscape influenced by both domestic and international factors. Uncertainties in German business sentiment, global market reactions to central bank actions, and key economic indicators contribute to the dynamic environment. Traders will likely stay vigilant, closely monitoring data releases and central bank communications for potential market shifts.