12/01/2023 Daily Reports
- The Euro (EUR) resumed its uptrend vs. the US Dollar (USD) and rose to an eight-month new high around 1.0776, ahead of the release of the Consumer Price Index (CPI) in the United States (US), which is foreseen to slow down. Hence the EUR/USD is trading at 1.0759 after hitting a daily low of 1.0725.
- Euro climbed on hawkish ECB commentary and expectations that US inflation would ease. Wall Street continues its rally ahead of the release of the US CPI report. The lack of US economic data releases and an irrelevant speech by the US Federal Reserve (Fed) Chair Jerome Powell on Tuesday left the EUR/USD adrift to speculations that US inflation would ease, which could pave the way for a less aggressive Fed. Consequently, the EUR/USD rose steadily.
- Aside from this, the EUR/USD got a lift courtesy of several European Central Bank (ECB) officials’ hawkish commentaries. On Tuesday, ECB’s Schnabel said that “interest rates will still have to rise significantly” and that “inflation will not subside by itself.” On Wednesday, the Bank of France Governor and ECB Governing Council (GC) member Francois Villeroy said that the ECB should reach its terminal rate by the summer.
- The Pound Sterling (GBP) failed to hold to earlier gains against the US Dollar (USD) and augmented selling pressure dragged the GBP/USD down after hitting a daily high of 1.2178. An upbeat market sentiment, as portrayed by US equities, failed to propel the risk-perceived Sterling higher.
- Wall Street opened with solid gains after US Federal Reserve Fed Chair Jerome Powell’s speech on Tuesday failed to provide any forward guidance. However, according to Rabobank Analysts, “The Chair was, however, able to squeeze in reference to the Fed prioritizing inflation over employment in the near term, when he said that the case for monetary policy independence lies in the benefits of insulating monetary policy decisions from short-term political considerations.”
- Investors shrugged off Powell’s words as US equities closed higher Tuesday. In the meantime, the GBP/USD failed to gain traction even though the Greenback continued to weaken. The US Dollar Index, a gauge of the buck’s value against its peers, is losing 0.08% at 103.193. An absent UK economic calendar keeps traders waiting for the release of the US Consumer Price Index (CPI) report Thursday. The Street’s estimates of headline inflation are 0% MoM; on an annual basis, a dip to 6.5% is expected. Excluding volatile items, the so-called Core CPI is foreseen at 0.3% MoM, a tick higher than the previous month, while yearly, it is estimated to come at 5.7%.
- Technical indicators hovering around the mid-lines. RSI indicator is around 50, while the Momentum indicators slightly below 0, which suggesting a near term neutral condition. On downside, the immediate support is 1.2100, unable to defend this level will resume the decline to 1.2075.
- Gold’s rally stalled around $1887 after hitting an eight-month new high, though it erased some of those gains, turning negative on Wednesday amidst an upbeat market sentiment. Speculations that softer-than-estimated US inflation report Thursday could spur a Fed pivot increased. However, the greenback is recovering, a headwind for XAU/USD prices. At the time of writing, the XAU/USD is trading at $1876.
- US equities continue to advance in the mid-New York session, portraying investors’ mood. The XAU/USD is perceived as traders booked profits ahead of December’s US inflation report. Data is estimated to show the Consumer Price Index (CPI) on a monthly basis, dropping to 0%, while year-over-year data is expected to fall from 7.1% to 6.5%. Excluding volatile items inflation, the so-called core CPI is forecasted to rise 0.3% MoM, while the consensus for annual-based core inflation is 5.7%.
- In the meantime, the US Dollar Index, a gauge of the greenback’s value against a basket of six currencies, is erasing earlier losses at 103.371, slightly up by 0.09%. Contrarily, US Treasury bond yields are falling four bps, down to 3.583%. Even though US bond yields extended their losses, XAU/USD continues to edge lower.
- On the US monetary policy side, traders’ expectations for a Fed rate hike of 25 bps lie at a 77% chance, as shown by money market futures, while for a 50 bps increase is 23%. Money markets expect the Federal Funds rate (FFR) to peak at around 4.92% in June 2023.
- From a technical perspective, the RSI indicator holds above the mid-line and stabilized around 67, still on a bullish strength. The Momentum indicator continued developing above the mid-line, suggests more upside potentials. On downside, the immediate support is 1860, below this area may resume the decline to 1842.
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- The USD/JPY pair gains some positive traction on Wednesday and climbs to the 133.00 neighbourhood, or a fresh weekly top during the early North American session. The uptick, however, lacks bullish conviction and runs the risk of fizzling out rather quickly.
- The US Dollar attracts some dip-buying and moves away from a seven-month low touched on Tuesday, which, in turn, is seen lending some support to the USD/JPY pair. Apart from this, a generally positive tone around the equity markets undermines the safe-haven Japanese Yen and provides a modest lift to the major. That said, growing acceptance that the Fed will soften its hawkish stance might hold back bulls from placing aggressive bets and keep a lid on any meaningful upside for spot prices, at least for now.
- speculations that the Bank of Japan (BoJ) will eventually phase out its ultra-loose monetary policy settings might further contribute to capping the USD/JPY pair. Traders might also refrain from placing directional bets and prefer to move to the sidelines ahead of the release of the US consumer inflation figures on Thursday. The crucial US CPI report will influence the Fed’s policy outlook, which, in turn, will drive the USD and provide a fresh directional impetus to the pair.
- Technical indicators still suggest the bearish strength, hovering below the mid-line. RSI fell below 50, while the Momentum indicator continued in negative territory, suggests bear potentials. On downside, the immediately support is 131.3, break below this level will open the gate to 130 area.
- DJI gained strength on Tuesday, hit a fresh three-week high of 34089, the market was well supported by 33830 area early US session and then surged to major resistance 34800 area. market shows a bullish sign in the hourly chart. It stand above both 20 and 50 MAs, suggests a bullish sign. also we can see a cross between 20 and 50MA which brought bull confidence. On upside, overcome 34089 may encourage bulls to challenge 34300, break above that level will open the gate to 34700.
- Technical indicators also suggest the bullish movement, developing above the mid-line. RSI stabilized around 70, while the Momentum indicator hovering well above the mid-line, suggests upside potentials. On downside, the immediately support is 33825, break below this level will open the gate for more decline to 33485 area.
- The Brent rallied more than 3% on Tuesday due to increased optimism on China’s reopening, the prices hit as low as of 80.90 early US session and surged to a one week high of 82.98 US afternoon. The market is whoring strong bullish sign in the hourly chart. The prices are standing on with a golden cross between two legs, indicating a bull potential. On upside, overcome 83.00 may encourage bulls to challenge 84.50, break above that level will open the gate to 86.00.
- Technical indicators also suggest bullish movement, hovering around the mid-line. RSI climbs to 75, while the Momentum index is well the mid-line, suggests a uptrend. On downside, the immediately support is 81.35, break below this level will open the gate for more decline to 80 area.
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