EURUSD
- The EUR/USD loses its recovery momentum around 1.0980, setting the stage for potential shifts in the currency pair.
- On Wednesday, attention will turn to the release of October Current Account and Construction Output data. Additionally, the preliminary Consumer Confidence figures for December will be released, providing insights into the economic sentiment in the Eurozone.
- Officials from the Federal Reserve (Fed) and European Central Bank (ECB) continue to push back against market expectations, emphasizing their commitment to data- driven decisions. Central bank communications can play a crucial role in shaping market expectations and currency movements.
- The latest CME Fed Fund rate probabilities show the US central bank cutting rates by 150 basis points next year with the first 25 basis point cut seen at the March FOMC meeting.
- Data from the US housing sector on Tuesday showed mixed results. Housing Starts unexpectedly rose to 1.56 million, surpassing the market consensus of 1.36 million. However, Building Permits declined to 1.46 million, highlighting nuances in the housing market.
| 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 dynamic environment influenced by economic data releases and central bank communications. Traders are closely monitoring German PPI data and upcoming economic indicators for potential market moves. The interplay between Eurozone data and the response to central bank guidance will likely shape the near-term trajectory of EUR/USD.
GBPUSD
- After two consecutive negative trading days, GBP/USD found stability early on Tuesday, holding above the 1.2650 level.
- The United Kingdom's Consumer Price Index (CPI) rose 3.9% in November compared to the same month a year ago, according to the Office for National Statistics. CPI is a key indicator of inflation, and this data release can influence monetary policy decisions.
- Bank of England (BoE) Deputy Governor Ben Broadbent, in a speech at the London Business School, emphasized the need for patience to observe a steady decline in wage inflation. These remarks had limited impact on GBP/USD.
- Comments from Federal Reserve (Fed) officials provided a mixed picture regarding the policy outlook. San Francisco Fed President Mary Daly suggested that rate cuts would be necessary next year to prevent over-tightening. In contrast, Cleveland Fed President stated that markets were somewhat ahead of the Fed on rate cut expectations.
- The dynamics in the GBP/USD pair are influenced by a combination of domestic economic indicators, central bank communications, and the broader market sentiment, particularly regarding the US Dollar.
| SMA (20) | Rising |
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| RSI (14) | Slightly Falling |
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| MACD (12, 26, 9) | Slightly Rising |
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Closing statement: GBP/USD is navigating a nuanced landscape influenced by inflation data, central bank commentary, and the evolving narrative around future interest rate adjustments. Traders are closely monitoring the balance between UK economic conditions, the Bank of England's stance, and the broader USD dynamics for potential market movements.
GOLD
- Gold price is taking a breather, trading near $2,040 early on Wednesday, after reaching multi-day highs at $2,048 on the previous day.
- Despite efforts by US Federal Reserve (Fed) policymakers to push back against expectations of potential interest rate cuts in the coming year, the market's pricing for rate reductions remains unchanged. Odds for a March Fed rate cut are seen at around 75%, while a May cut is nearly certain.
- All eyes are on Friday's release of the US Core Personal Consumption Expenditures (PCE) Price Index, which is the Fed's preferred inflation gauge. This data is crucial for solidifying expectations for a potential rate cut in March.
- Mid-tier US housing data and comments from Federal Reserve officials will continue to drive the value of the US Dollar. Changes in the USD value can, in turn, impact the price of Gold.
- Recent commentary from Fed officials includes Chicago Fed President Austan Goolsbee's statement that the "market has gotten ahead of themselves on euphoria" regarding potential interest rate cuts. Atlanta Fed President Raphael Bostic mentioned on Tuesday that there is no current "urgency" for the Fed to reduce US interest rates given the strength of the economy.
Closing statement: Gold is navigating a landscape influenced by interest rate expectations, economic data, and central bank communications. Traders are closely watching the Fed's preferred inflation gauge on Friday, along with other mid-tier economic indicators and statements from Fed officials, for insights into potential market movements.
CRUDE OIL
- West Texas Intermediate (WTI) oil snaps a two-day winning streak, trading lower around $74.10 per barrel during the Asian session on Wednesday.
- Crude oil prices found support from geopolitical disruptions, specifically attacks by the Iran-led Houthi militant group on commercial vessels in the Red Sea.
- In response to the Red Sea attacks, the United States has taken action by establishing a task force to safeguard Red Sea commerce, reflecting the seriousness with which the US is addressing the situation.
- According to S&P Global Commodity Insights, the United States is anticipated to increase oil production. This contributes to expectations of robust non-OPEC+ supply growth, which might surpass the growing global demand in the upcoming year.
- The American Petroleum Institute (API) Weekly Crude Oil Stock for the week ending on December 15 rose to 0.939 million barrels, indicating a swing from the previous decline of 2.349 million barrels. The US Energy Information Administration is scheduled to release the Crude Oil Stocks Change report on Wednesday.
| 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: WTI oil is facing a complex market environment shaped by geopolitical tensions, US response measures, expectations of increased US oil production, and inventory data. Traders are closely monitoring geopolitical developments and key reports to gauge the near-term direction of oil prices.
DAX
- Yesterday, finalized November inflation numbers for the Eurozone garnered investor interest. Softer inflationary pressures were aligned with market bets on ECB rate cuts in 2024.
- Yesterday, Francois Villeroy de Galhau, the Governor of the Bank of France and ECB Executive Board member, discussed inflation and interest rates. Regarding rate cuts, Villeroy reportedly mentioned: “We had to raise interest rates to tackle the inflation disease (...) Between this rise that, barring any surprise, is over, and the lowering that should occur sometime in 2024, there is a plateau.”
- Better-than-expected US housing sector data on Tuesday supported buyer demand for riskier assets, countering hawkish Fed comments.
- FOMC member Raphael Bostic's forecast of two Fed rate cuts in 2024 did not significantly impact investors, despite the markets expecting US interest rates to drop below 4.5% in 2024.
- Producer prices in Germany had an annual drop of 7.9% in November, landing lower than analysts expected but still higher compared to October's 11%, according to Germany's statistical office, Destatis. Compared to the previous month, they dropped by 0.5%. Consumer confidence in Germany is expected to recover further next month and stand at negative 25.1, up from December's revised figure of negative 27.6.
| 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 through a landscape influenced by inflation data, ECB commentary, US economic indicators, and internal dynamics such as German producer prices. The market's focus is on how central bank policies and economic indicators will shape investor sentiment in the coming sessions.