EURUSD
- The EUR/USD pair continues its positive momentum, marking the fifth consecutive day of gains during the early European session on Wednesday.
- From a technical perspective, the bullish sentiment in the EUR/USD pair remains robust. The pair is holding above the 50- and 100-hour Simple Moving Averages (SMA) on the daily chart, reinforcing the positive trajectory.
- The US Dollar experiences a fourth consecutive day of decline. Speculation circulates that the Federal Reserve (Fed) may have concluded its tightening cycle and could potentially reverse substantial rate hikes as early as May 2024.
- Germany released the GfK Consumer Confidence Survey, revealing an improvement in December to -27.8 from the previous month's -28.1. This data suggests increased confidence among German consumers.
- Germany is set to release the preliminary estimates of the November Harmonized Index of Consumer Prices (HICP) on Wednesday. Additionally, the United States will publish the October Personal Consumption Expenditures (PCE) - Price Index, and the Eurozone will unveil the November HICP on Thursday. These releases are anticipated to contribute to market dynamics.
| 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 EUR/USD pair sustains its winning streak, supported by a favorable technical outlook and a weakening US Dollar. German consumer confidence shows improvement, and upcoming economic data releases are poised to shape market sentiment. Investors await insights from German inflation figures and key US indicators in the coming sessions.
GBPUSD
- GBP/USD maintains its upward trajectory, marking the fifth consecutive day of gains and reaching a new three-month high.
- The US Dollar faces headwinds as market speculation grows that the Federal Reserve (Fed) has concluded its rate-hiking cycle and might initiate policy easing as early as 2024. This sentiment contributes to the depreciation of the USD.
- The British Pound (GBP) benefits from diminishing expectations of an early rate cut by the Bank of England (BoE). The market perceives a reduced likelihood of a swift policy adjustment by the BoE.
- BoE Deputy Governor Dave Ramsden commented on Tuesday, stating that UK inflation is primarily driven by domestic factors. He emphasized that monetary policy needs to remain restrictive for an extended period, contributing to the supportive environment for the Pound.
- The UK macroeconomic calendar is relatively light for the week. Notably, the October BRC Shop Price Index was released, showing a year-on-year improvement to 4.3% from the previous month's 5.2%.
| 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: GBP/USD continues its positive momentum, reaching a three-month high. Factors such as a weakening US Dollar, reduced expectations of a BoE rate cut, and supportive comments from BoE Deputy Governor Ramsden contribute to the pair's upward movement. Light economic data from the UK this week maintains focus on broader market dynamics.
GOLD
- Gold price reaches its highest level in six months, hovering around $2,050 early on Wednesday.
- The Relative Strength Index (RSI) on the daily chart indicates overbought conditions, cautioning gold buyers. However, the impending Golden Cross, where the 50-day moving average crosses above the 200-day moving average, suggests the overall uptrend remains intact.
- The absence of significant US economic data this week places gold price at the mercy of Federal Reserve (Fed) commentary and broader risk sentiment. The bearish momentum in the US Dollar (USD) and US Treasury bond yields is intensified by recent dovish remarks from Fed Governor Christopher Waller, traditionally considered a hawk. His comments hinted at a policy pivot, contributing to USD weakness.
- On the other hand, Fed Governor Michelle Bowman expressed readiness for another rate increase if supported by incoming data.
- The market pricing, as indicated by CME Group’s FedWatch Tool, reflects a shift in expectations. There is now approximately a 40% chance that the Fed could initiate rate cuts as early as March, a significant increase from the 21.5% chance observed just a day ago. The market also prices in roughly 100 basis points (bps) of rate cuts for the next year.
Closing statement: Gold continues its upward momentum, reaching a six-month high around $2,050. Technical indicators caution buyers about potential overbought conditions, but the impending Golden Cross suggests the overall uptrend remains intact. USD weakness, fueled by dovish Fed commentary and changing rate hike expectations, contributes to Gold's positive performance. The market is closely monitoring Fed communications for further guidance.
CRUDE OIL
- Western Texas Intermediate (WTI), the US crude oil benchmark, is currently trading around $76.60 on Wednesday.
- The recovery in WTI prices is supported by expectations that the Organization of the Petroleum Exporting Countries and its allies (OPEC+) will discuss and potentially implement production cuts. The meeting is scheduled for Thursday.
- The weaker US Dollar contributes to the positive momentum in WTI prices.
- Traders express concerns about potential supply disruptions from Kazakhstan. A significant storm in the Black Sea area has interrupted oil exports from Kazakhstan and Russia, impacting up to 2 million barrels per day (bpd).
- The market will look for cues from the US Gross Domestic Product Annualized for the third quarter (Q3) on Wednesday. Expectations are for a 5.0% expansion.
| 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 crude oil prices are currently at around $76.60, and the market is influenced by expectations of OPEC+ discussions on production cuts and the impact of a weaker US Dollar. Concerns about supply disruptions from Kazakhstan due to adverse weather conditions are also contributing to market dynamics. Traders are awaiting the OPEC+ meeting and monitoring economic data, including the upcoming US GDP figures, for further insights into oil market trends.
DAX
- The DAX Index has been in focus, responding favorably to economic developments. Technical indicators suggest that near-term trends are sensitive to key economic factors and central bank responses.
- On Tuesday, the GfK Consumer Confidence Index for Germany increased from -28.3 to -27.8 for December.
- Wednesday will see the release of German inflation figures for November. Softer-than-expected numbers could impact the need for a hawkish European Central Bank (ECB) rate path, influencing inflation management.
- On the same day, the second estimate of the GDP number for the third quarter in the United States will be released.
- Near-term trends for the DAX Index are closely tied to inflation data and central bank responses. Softer inflation figures and increasing expectations of rate cuts in H1 2024 could influence the DAX toward recent highs.
| SMA (20) | Rising |
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| RSI (14) | Slightly Rising |
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| MACD (12, 26, 9) | Rising |
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Closing statement: The DAX Index has responded positively to recent economic events, with a focus on German consumer confidence. As attention shifts to German inflation numbers and US GDP data, the near-term trajectory of the DAX will likely be influenced by these key economic indicators. Central bank responses to economic conditions, particularly in relation to inflation, will play a crucial role in determining the index's direction, with potential implications for borrowing costs and profit margins.