Daily Price Outlook
The S&P 500 has demonstrated a positive trajectory in today’s trading session, registering a gain of 17.22 points, or an increase of 0.38%, bringing the index to 4,567.80. This upward movement reflects a growing investor confidence in the market.
Bank of America’s Sell Side Indicator and Market Outlook
According to Bank of America’s Sell Side Indicator (SSI), a contrarian sentiment gauge, there has been a recent increase to 53.6%, up by 56 basis points. This rise comes on the heels of the S&P 500's nearly 9% rally in its best month since July 2022, indicating a strong recovery momentum.
Historical Significance and Future Predictions
While the SSI has only risen modestly from its May low, historical trends suggest that the current level often precedes positive 12-month returns for the S&P 500. The indicator predicts a +15% expected price return over the next year, potentially pushing the S&P 500 to around 5300 by end-2024. Currently, the SSI is in a "Neutral" position but shows a tendency towards a "Buy" signal.
Analysts' Viewpoint Amidst Market Uncertainties
Despite the market not being dominated by high conviction or euphoria, Bank of America’s analysts maintain a constructive outlook on equities. They cite factors like reduced uncertainty in inflation and interest rates, effective corporate cost-cutting, and stable profit margins as reasons for optimism. The bank’s target for the S&P 500 by 2024-end is 5000.
Wall Street’s Performance and Economic Data
Following a strong November, U.S. stock futures have shown muted movements today. The Dow Jones Futures edged up slightly, while the S&P 500 Futures saw a marginal increase. Anticipation builds around Federal Reserve Chair Jerome Powell's speech and the release of key economic data, including construction spending and ISM Manufacturing figures.
Corporate Sector Developments
In corporate news, the market awaits earnings reports from companies like Dominion Energy, Gartner, and Cardinal Health. Disney's reinstatement of its dividend and Ulta Beauty’s premarket surge post-strong quarterly results are key highlights. Tesla also remains a focal point with its Cybertruck pricing announcement and delivery start.
S&P500 (SPX) - Technical Analysis
The S&P 500 index, a key benchmark for the broader U.S. stock market, has exhibited a positive momentum, closing at 4567.81, a 0.38% increase. This upward movement is reflective of a broader market sentiment that remains cautiously optimistic, driven by a mix of economic indicators and corporate earnings reports.
In terms of technical analysis, the index is hovering around a pivot point of $4,582. The immediate resistance levels are identified at $4,604, $4,639, and $4,676.
These thresholds will be critical in determining the index's ability to sustain its upward trajectory. Conversely, the support levels are set at $4,547, $4,523, and $4,488, offering stability against potential market pullbacks.
The technical indicators present an insightful picture. The Relative Strength Index (RSI), currently at 69, is just below the overbought threshold, indicating robust buying interest in the market. This is corroborated by the Moving Average Convergence Divergence (MACD) value of -7.56, which, despite being negative, is countered by a signal value of 39, suggesting that bullish momentum could resume.
Moreover, the index's position relative to its 50-Day Exponential Moving Average (EMA) of $4,553 indicates a short-term bullish trend. The index's movement above this average signals continued investor confidence and potential for further gains.
The chart analysis highlights a notable pattern - the double top's breakout is now acting as a support level at $4,529. This pattern's resolution reinforces the bullish narrative, suggesting that the index may continue its climb in the near term.
Daily Price Outlook
As the week draws to a close, the Euro (EUR) finds renewed strength against the US Dollar (USD), with the EUR/USD pair approaching just over the 1.0900 mark. This rebound comes after a period of relative steadiness, signaling a potential shift in the currency dynamics.
USD Index Retreats Amid Stable US Yields
Conversely, the US Dollar has relinquished some of its recent gains, with the USD Index (DXY) retreating to the vicinity of 103.40. This pullback occurs in the context of a general lack of direction in US yields across various timeframes, contributing to the Dollar's tempered momentum.
Investor Focus on Central Bank Policies
The market's current stability reflects a broad anticipation of future interest rate cuts by both the Federal Reserve (Fed) and the European Central Bank (ECB) in early 2024. Investors are closely monitoring these developments, gauging the potential impact on currency valuations.
Key Upcoming Events and Speeches
Looking ahead, significant focus is placed on upcoming speeches by ECB's Andrea Enria, Frank Elderson, and President Christine Lagarde. These addresses are expected to provide further insights into the ECB's policy direction.
US Economic Indicators in Spotlight
In the United States, the spotlight shifts to the ISM Manufacturing index, followed by Construction Spending and the final S&P Global Manufacturing PMI for November. These indicators will offer a glimpse into the current state of the US manufacturing sector and broader economic health.
Market Sentiments and Global Influences
The EUR is currently showing a slight edge against the USD, while US and German yields exhibit mixed trends. Market consensus leans towards an expectation of the Fed initiating rate cuts in spring 2024, while the ECB is anticipated to maintain its current stance until the second quarter of 2024. Additionally, the Chinese Caixin Manufacturing PMI's rise above 50 in November adds an international dimension to the market's outlook. Later in the session, ECB President Lagarde's speech and Fed Chair Powell's participation in a roundtable discussion are keenly awaited for potential market-moving insights.
EUR/USD - Technical Analysis
As the year winds down, the EUR/USD pair demonstrates a nuanced dance between key technical indicators and market dynamics. The currency pair, trading at 1.0905, has seen a modest increase of 0.15% over the last 24 hours. This move reflects the current market's cautious optimism, driven by various global economic factors, including policy decisions from major central banks and shifting investor sentiment.
At the heart of this analysis is the pair's position relative to its key price levels. The pivot point stands at $1.0807, with immediate resistance observed at $1.0874. Further resistance levels are mapped at $1.0919 and $1.0986. These points are crucial to understanding the potential for upward movement. Conversely, the support levels at $1.0762, $1.0716, and $1.0668 provide a safety net against any downward trends.
The technical indicators offer a mixed picture. The Relative Strength Index (RSI) currently sits at 38, suggesting a bearish sentiment without veering into oversold territory. This could indicate potential room for upward movement before a peak is reached. On the other hand, the Moving Average Convergence Divergence (MACD) hovers around zero, providing no clear directional bias.
A key observation is the EUR/USD's proximity to the 50-Day Exponential Moving Average (EMA) of $1.0900. Currently, the pair is trading just above this marker, hinting at a short-term bullish trend. However, an upward channel breakout at 1.0922 signals a potential sell trade, suggesting that the pair might be poised for a reversal if it fails to sustain above this threshold.
Daily Price Outlook
Gold prices (XAU/USD) are witnessing modest gains in the early European session, effectively recouping a significant portion of the losses incurred the previous day. The metal is trading near the $2,043-$2,044 mark, up about 0.40%, approaching its highest level since early May. The market's growing conviction that the Federal Reserve's rate-hiking phase is over, with potential rate cuts looming as soon as March 2024, is providing substantial support to gold, a traditionally non-yielding asset.
USD Struggles Despite Positive Outlook, Aiding Gold's Rise
Contrary to the Fed's dovish outlook, the US Dollar (USD) has struggled to build on its recent recovery from August lows. The subdued movement in USD, coupled with concerns over China's economic challenges and a dimming global economic forecast, is bolstering gold's appeal. However, gains in the European equity markets could limit the precious metal's ascent. Additionally, remarks from Federal Reserve officials suggest a cautious stance towards immediate rate cuts, potentially restraining bullish sentiment in gold markets.
Gold's Performance and Key Market Indicators
Gold remains poised to conclude the week on a positive note for the third consecutive time, with traders eyeing the upcoming US ISM Manufacturing PMI for further direction. However, the primary focus remains on Fed Chair Jerome Powell's upcoming speech, which is expected to shed light on future interest rate trajectories and could inject volatility into the market.
Federal Reserve Policies and Inflation Data Impact
Speculation that the Federal Reserve may halt rate hikes and ease monetary policy by mid-2024 continues to underpin gold prices. The CME group's FedWatch Tool suggests a 50% chance of rate cuts by March 2024, with an 80% likelihood by the May FOMC meeting. This sentiment was reinforced by recent inflation data, which indicated a stagnation in the Personal Consumption Expenditures (PCE) Price Index in October and a year-on-year slowdown since March 2021. Additionally, jobless claims have reached a two-year high, further implying potential economic slowdown.
Fed Officials' Perspectives and Market Outlook
New York Fed President John Williams emphasized the need for a sustained restrictive policy to achieve inflation targets, while San Francisco Fed President Mary Daly sees current rates as effective for inflation control but remains non-committal on future cuts. With these mixed signals from the Fed, market attention is keenly set on Jerome Powell's address, which could significantly influence the XAU/USD. The release of the US ISM Manufacturing PMI, expected to show continued contraction, will also be closely watched by traders for short-term market opportunities.
GOLD (XAU/USD) - Technical Analysis
Gold, a longstanding symbol of wealth and security, is demonstrating a bullish trend in the market as it closes at $2,039, marking an increase of 0.18%. This upward trajectory is anchored by key price levels, with a pivot point at $2,034 and immediate resistances at $2,060, $2,087, and $2,113. These resistance levels represent crucial targets for gold’s potential ascent, while support levels at $2,018, $1,991, and $1,976 offer a safety net against any price pullbacks.
The technical indicators further support this optimistic outlook. The Relative Strength Index (RSI), currently at 63, indicates a robust bullish sentiment without straying into overbought territory. This points to sustained investor interest and potential for continued price growth. The Moving Average Convergence Divergence (MACD) presents a more nuanced view. Despite a current value of -1.36, its signal of 8.07 suggests that upward momentum is within reach, hinting at a possible shift in trend.
Perhaps most telling is Gold's position relative to its 50-Day Exponential Moving Average (EMA) of $2,016. Trading above this indicator, Gold confirms a short-term bullish trend, implying confidence among traders and investors. The observed upward channel pattern in the chart analysis further cements this bullish scenario, suggesting that prices may continue to rise, especially if they remain above the $2,034 mark.
In conclusion, the overall trend for gold appears decidedly bullish above $2,034, pointing to a market that is ripe for potential gains. Investors and traders are eyeing the resistance at $2,060 in the coming days, with an optimistic eye on even higher levels.
Daily Price Outlook
Gold (XAU/USD) experiences a period of stabilization in the early European trading hours on Thursday. After achieving its highest levels since May 5 just a day earlier, the metal now shows signs of consolidation. Investors are exhibiting caution, opting to await the crucial US inflation data before committing to new market positions.
Anticipation Ahead of US PCE Price Index Release
The upcoming release of the US Personal Consumption Expenditures (PCE) Price Index, scheduled for the North American session, is highly anticipated. This key inflation indicator could significantly sway the Federal Reserve's upcoming policy decisions, thereby impacting the US Dollar's (USD) strength and subsequently influencing gold, a non-yielding asset.
Factors Influencing Current Market Trends
As the market braces for the PCE data, the US Dollar finds some footing, recovering modestly from its August 11 low. This development coincides with a positive sentiment in US equity futures, presenting challenges for gold, typically considered a safe-haven asset. However, expectations that the Fed might pause its interest rate hikes and potentially reduce rates by March 2024 are limiting any substantial gains for the US Dollar. These speculations are supported by China's economic challenges, providing indirect support to XAU/USD.
Federal Reserve's Stance and Its Impact
Recent comments from Federal Reserve officials hint at a potential halt in interest rate hikes, a factor that has been buoying gold prices. Notably, Fed Governor Christopher Waller suggested the possibility of upcoming rate cuts, while Cleveland Fed President Loretta Mester acknowledged progress in controlling inflation. Market forecasts now include a total of 100 basis points in rate reductions by the Fed in 2024, a sentiment echoed by the dip in US Treasury bond yields.
Treasury Yields and Economic Data Influence
The yield on the 10-year US Treasury bond, which recently surpassed 5% for the first time in 16 years, is now hovering near its lowest since mid-September. Meanwhile, the yield on the two-year note, sensitive to rate changes, remains low, though a slight uptick in the Dollar limits XAU/USD gains. The revised US GDP figures, showing a 5.2% growth in Q3, provided a modest boost to the Dollar, yet the dovish outlook for the Fed is likely to restrain any significant recovery from its recent lows.
China's Economic Indicators and Global Concerns
Data from China further influences market dynamics, with the Manufacturing PMI falling slightly to 49.4 and the non-manufacturing PMI declining to 50.2. These figures raise concerns about the health of the world's second-largest economy, potentially affecting global market trends and commodity prices, including gold.
In conclusion, as investors navigate through these complex economic indicators and policy speculations, gold prices are likely to continue reflecting the interplay between global economic health, Federal Reserve policy expectations, and the resulting currency fluctuations.
GOLD (XAU/USD) - Technical Analysis
As the curtain rises on the last trading day of November, gold exhibits a subtle uptrend, with the price slightly inching up by 0.09% to $2,046. This incremental rise is a testament to the precious metal’s persistent allure amid a complex macroeconomic tableau. On the technical front, gold’s movements are encapsulated within a well-defined range, characterized by a pivot point at $2,034, which serves as the crucible for its short-term trajectory.
The immediate resistance for gold is perched at $2,060, with further barricades at $2,087 and $2,112. Should the luster of gold diminish, it would find support at $2,017, with additional safety nets at $2,017 and $1,975, promising to arrest any potential freefalls.
Indicators paint a mixed picture; the Relative Strength Index (RSI) stands at an elevated 73, traditionally signaling overbought conditions that could precede a pullback. However, the Moving Average Convergence Divergence (MACD) at 0.57, with a signal of 12.34, isn’t as emphatic, offering no clear directional bias. The 50-Day Exponential Moving Average (EMA), currently at the $2,040 mark—gold’s current trading price—suggests a neutral to slightly bullish sentiment, as prices teeter above this moving average.
The chart patterns observed do not assert a dominant narrative, with gold’s recent price action not forming any discernible patterns that would imply a breakout in either direction. This lack of pattern clarity dovetails with the hovering RSI, painting a picture of uncertainty.
In conclusion, the golden narrative is cautiously optimistic, buoyant above the pivot point of $2,034, yet vulnerable to shifts in sentiment. The short-term forecast is bullish with an eye on the resistance at $2,060, but traders should brace for volatility, especially given the overextended RSI.
Daily Price Outlook
The Australian Dollar (AUD) has shown resilience, recovering from its recent downturn despite unfavorable economic indicators from Australia on Thursday. The AUD/USD pair experienced a retracement from its near four-month peak of 0.6676, mainly due to a rebound in the US Dollar (USD).
Australia's economic landscape appears challenging, as evidenced by the Private Capital Expenditure for the third quarter, which declined by 0.6% against the expected rise of 1.0%. This decline, highlighted by the Australian Bureau of Statistics, points to a decrease in investment intentions in the private sector, potentially easing inflationary pressures and affecting the Reserve Bank of Australia's (RBA) stance on interest rate hikes.
Furthermore, Chinese economic data adds to the complex scenario. The National Bureau of Statistics Manufacturing PMI for November in China fell to 49.4, contrary to expectations of an increase, while the Non-Manufacturing PMI also declined. These figures might prompt discussions on additional economic stimulus, which could indirectly support the Australian Dollar, given the close economic ties between Australia and China.
Meanwhile, the US Dollar Index (DXY) saw a pause in its downward trend on Wednesday, bolstered by unexpectedly strong US GDP data. However, the DXY's recovery appears tentative as it struggles to maintain its ground on Thursday.
The focus now shifts to key economic releases from the United States, slated for the North American session. Notably, the weekly Jobless Claims are anticipated to rise, and the Core Personal Consumption Expenditure (PCE) Price Index for October is expected to show a deceleration in consumer inflation. These indicators could influence market sentiments and have implications for currency movements.
In addition to these external factors, domestic data from Australia, such as the Monthly Consumer Price Index (CPI) for October and the Retail Sales data, reveal a slowing inflationary trend and a contraction in consumer spending. This, combined with RBA Governor Michele Bullock's cautious approach to rate hikes and an emphasis on balancing inflation control with unemployment risks, paints a nuanced picture of the Australian economic outlook.
On the US front, Federal Reserve officials' comments, including those from Governor Christopher Waller, suggest a possible pivot in monetary policy if inflation shows a consistent downward trend. The robust GDP growth in the US contrasts with a steady Housing Price Index and an increase in consumer confidence, as per the latest CB Consumer Confidence Index.
In summary, the Australian Dollar's recovery amidst these diverse economic data points underscores the complex interplay of domestic and global economic forces influencing currency markets. The AUD's trajectory in the near term will likely be shaped by further developments in both the Australian and global economic landscape, particularly the upcoming US data releases.
AUD/USD - Technical Analysis
The Australian Dollar (AUD) has displayed resilience against the US Dollar (USD), appreciating by 0.36% and currently trading at 0.66. This performance underscores a strengthened AUD, buoyed by positive economic cues and a retreating USD amid shifting global sentiment.
AUD/USD finds itself navigating through pivotal levels with a critical pivot point at $0.6650. The currency pair faces immediate resistance at $0.6707, with further potential ceilings at $0.6764 and $0.6824. Should the AUD face a reversal, it will encounter support at $0.6618, with deeper fallbacks positioned at $0.6558 and $0.6527.
The technical landscape is reinforced by a Relative Strength Index (RSI) of 62, indicative of a bullish undertone without straying into overbought territory. Moreover, the AUD's stance above the 50-Day Exponential Moving Average (EMA) of $0.6579 corroborates this short-term bullishness, suggesting an underlying momentum that may persist.
From a chartist's perspective, the pair does not currently exhibit a definitive pattern, but its position relative to the 50 EMA and the pivot point suggests a potential for continuation of the current trend.
In essence, the AUD/USD’s bullish trend appears intact above the 0.66034 mark, with anticipation for the pair to challenge the immediate resistance at $0.6707 in the approaching sessions.
Daily Price Outlook
The Japanese Yen (JPY) continues to exhibit strength against the US Dollar (USD) for the fifth consecutive day, despite the Bank of Japan (BoJ)'s less hawkish stance, as indicated by recent comments from BoJ officials. BoJ board member Seiji Adachi emphasized on Wednesday that Japan's economy is not yet at a stage to consider exiting its ultra-easy monetary policy. This sentiment was echoed on Thursday by BoJ policymaker Toyoaki Nakamura, who noted the absence of sustained, stable 2% inflation and wage growth.
Investors seem to anticipate a shift from the BoJ's dovish policy, a sentiment that, combined with a weaker risk appetite, supports the JPY. This investor sentiment is further influenced by the disappointing Chinese PMI figures for November, reflecting concerns about the health of the world's second-largest economy. Concurrently, the USD is facing pressure, reflected in the USD/JPY pair trading near a three-month low as the European session commences on Thursday.
The USD Index (DXY) struggles to build on its overnight recovery, hindered by the consensus that US interest rates have reached their peak. Market expectations of the Federal Reserve (Fed) potentially easing its monetary policy as early as March 2024 have resulted in a decline in US Treasury bond yields, further challenging the USD. These factors suggest a downward trajectory for the USD/JPY pair, with the upcoming US PCE Price Index release being the next focal point for traders.
Despite the BoJ's recent less hawkish comments, the expectation of a shift in the bank's stance lends support to the JPY. Adachi's remarks about Japan not yet seeing a positive wage-inflation cycle and the BoJ's readiness for additional easing measures suggest a cautious approach to policy normalization. Similarly, Nakamura's comments underline the need for patience in maintaining the current easing policy.
The Japanese economy shows mixed signals, with Retail Trade in October declining by 1.6% month-on-month but registering a 4.2% year-on-year growth, an upward revision from the previous month. The Industrial Production in Japan also exceeded expectations, recording a 1% increase in October compared to September and a 0.9% year-on-year growth.
In contrast, the US economy reported a stronger-than-anticipated growth, with a 5.2% annualized increase in GDP for the third quarter. However, the impact of this positive data was somewhat offset by dovish signals from Federal Reserve officials, indicating a likelihood of rate cuts in 2024. Cleveland Fed President Loretta Mester acknowledged progress in achieving a 2% inflation rate, while Richmond Fed President Tom Barkin expressed concerns about persistent inflation.
The speculation in the US rates futures markets about more than 100 basis points of rate cuts starting in May 2024, coupled with the lowest yield on the two-year US government bond since July, keeps USD bulls cautious. This backdrop sets a bearish tone for the USD/JPY pair ahead of the release of the US PCE Price Index.
USD/JPY - Technical Analysis
In the currency markets today, the USD/JPY pair has seen a slight decline, down by 0.12% to 147.03, reflecting a tentative bearish sentiment among traders. This minor dip may be an indicator of a broader hesitation within the market as investors grapple with the pair’s recent volatility.
The pair is currently trading around a pivot point of 145.98, indicating potential shifts in market direction. The immediate resistance is seen at 147.80, with further barriers at 148.83 and a significant resistance at 150.54. On the downside, immediate support lies at 144.90, with additional supports placed at 143.81 and 142.67, which could stabilize any further downward movement.
Technical indicators suggest a bearish inclination with the RSI at 34, indicating that the pair is nearing oversold conditions, which could presage a potential bounce back if buying interest is triggered. The price sitting below the 50-Day EMA of 147.38 further solidifies the current bearish bias.
Chart patterns do not present a clear narrative, but the price below the 50 EMA and the pivot suggests a bearish undertone may persist in the short term.
The overall technical perspective for the USD/JPY pair is bearish as long as it remains below 147.72. The immediate expectation is for the pair to potentially test and react to the identified resistance levels in the near future.
Daily Price Outlook
The GBP/USD currency pair has maintained its upward momentum, surpassing the 1.2700 level during the early European session on Wednesday. However, this surge was driven by a weakened US Dollar (USD) and diminished US Treasury bond yields. Adding to the bullish sentiment, Bank of England (BoE) Governor Jonathan Haskel emphasized that inflationary pressures persist in the UK labor market. Furthermore, he indicated that there is no coming possibility of reducing interest rates from their 15-year high. This statement by Haskel is widely seen as a key factor contributing to the sustained strength of the GBP/USD pair.
Bank of England's Perspective on Inflation and Monetary Policy
As previously mentioned, Jonathan Haskel, the Governor of the Bank of England, highlighted the ongoing inflationary pressures within the UK job market. Consequently, he expressed the unlikelihood of a near-term reduction in interest rates from their 15-year peak. Deputy Governor Dave Ramsden further emphasized the necessity of maintaining a relatively restrictive monetary policy to effectively curb inflation.
Governor Andrew Bailey has acknowledged the challenge of meeting the central bank's 2% inflation target, citing recent fluctuations primarily driven by changes in energy prices. Nevertheless, the Bank of England's most recent forecasts anticipate a resurgence to the 2% inflation target by the conclusion of 2025.
Hence, the news, including the Bank of England's reluctance to lower interest rates and the acknowledgment of inflation challenges, will contribute to a positive sentiment for the GBP/USD pair, potentially strengthening the pound against the US dollar.
Mixed Data and Waller's Remarks Impact GBP/USD Pair
Furthermore, Federal Reserve Governor Christopher Waller mentioned on Tuesday that though inflation remains high, progress has been achieved, and there's no plan for further rate hikes. This sentiment, signaling a potential end to rate increases, puts downward pressure on the USD, providing support for the GBP/USD pair.
Hence, Waller's remarks on a potential halt in rate hikes lifted GBP/USD as it weakened the USD.
Moving on, traders are watching the US Gross Domestic Product Annualized report for Q3, expected to show a 5.0% growth rate later on Wednesday. Besides this, Bank of England Governor Bailey is scheduled to speak later in the day.
GBP/USD - Technical Analysis
The British Pound shows renewed vigor against the U.S. Dollar, maintaining a steady climb in the Forex market. As of the latest session, GBP/USD has edged up, trading around the 1.2710 mark, a modest increase that extends its recent upward trajectory. The daily chart showcases the pair's assertive break above the Fibonacci retracement level of 1.27194, hinting at potential further gains.
In the broader view, the pivot point stands at 1.25890, now serving as a solid support level after the pair's decisive breakout. Resistance levels are eyed at 1.29050, with subsequent ceilings waiting at higher Fibonacci extensions. Should the pound continue its ascent, these levels could soon come into play.
The Relative Strength Index (RSI) accentuates the bullish momentum, currently reading above the 63 mark, reflecting strong buying pressure without yet breaching into the overbought region. This suggests that there might be room for further upside before any significant retracement.
Complementing the RSI, the pair trades above the 50-day Exponential Moving Average (EMA), reinforcing the bullish stance in the short term. The EMA provides a dynamic support that could bolster buyer confidence should any pullbacks occur.
In summary, the GBP/USD pair is capturing the attention of traders with its bullish momentum, underpinned by technical indicators that favor the continuation of the upward trend. Looking forward, should the pair maintain its hold above key technical levels, the path to higher resistance zones appears clear, with a keen eye on the 1.29050 level for potential challenges.
Daily Price Outlook
Gold price (XAU/USD) maintained its previous six day winning streak and reached a multi-month peak around the $2,052 level during the Asian session. However, the reason for its upward rally could be attributed to the dovish Fed expectations, falling US bond yields and a bearish USD, which persistently provide support to the gold price.
It's worth noting that investors currently believe the Federal Reserve won't raise interest rates. However, the market predicts around an 85 basis points decrease in interest rates by December 2024, as shown by Fed funds futures. This, coupled with a disappointing US bond auction, has caused a drop in US Treasury bond yields.
Specifically, the yield on the 10-year US government bond is now at 4.274%, its lowest since mid-September. Consequently, the US dollar is at its weakest since August 11, prompting increased demand for gold..
US Dollar Declines as Rate Cut Expectations Grow Amidst Differing Fed Views
The broad-based US dollar failed to stop its downward trend and remained at its lowest in over three months due to growing expectations of several interest rate cuts by the Federal Reserve in 2024, boosting the appeal of gold. Fed Governor Christopher Waller hinted at possible rate cuts if inflation eases in the coming months, expressing confidence in the current policy to stabilize the economy and reach the 2% inflation target.
However, Fed Governor Michelle Bowman holds a different view, emphasizing the potential need for more rate hikes to address persistent inflation. The market expects the Fed to maintain its key lending rate in December, but officials remain watchful of inflation.
Ceasefire Extension Impact on Gold and Focus on US Economic Reports
Furthermore, the ceasefire agreement between Israel and Hamas has been extended by two days, reducing the appeal of safe-haven assets. As per the original deal, Hamas has already released 50 hostages, and an additional 20 are set to be released in the next two days. In return, Israel is releasing Palestinian prisoners. This positive development was seen as a key factor that could limit gains in the gold market.
Moving forward, traders are focused on the upcoming preliminary US GDP report. Afterward, market attention will shift to the US Core PCE Price Index on Thursday.
GOLD (XAU/USD) - Technical Analysis
The gold market presents a shimmering technical outlook as the precious metal trades robustly at $2,045.29, up 0.16%. Maintaining its ascent within a well-established upward channel on the 4-hour chart, gold reflects a bullish sentiment that has solidified over the past week.
Key price levels to watch are the pivot point at $2,030.33 and immediate resistance near the Fibonacci extension level at $2,057.05, which could serve as the next battleground for bulls. A succession of resistances lies ahead, with the potential to test $2,069.82 if upward momentum persists.
Technical indicators offer additional insights. The Relative Strength Index (RSI), currently at 80.78, signals that gold is in overbought territory, suggesting a possible retracement or consolidation might be on the horizon. However, the 50-Day Exponential Moving Average (EMA), at $2,045.64, indicates that the trend is firmly bullish in the short term, with prices maintaining above this key moving average.
Chart patterns underscore the strength of the current trend, with the price action breaking past the $2,041.29 resistance level, hinting at sustained bullish momentum. This break, coupled with robust trading volumes, suggests that traders continue to find value in gold as a safe haven amid market uncertainty.
In conclusion, while the overall trend for gold remains decidedly bullish, the recent push into overbought territory may temper expectations for the immediate term. Investors should prepare for potential volatility with an eye on key technical levels, as the market determines if gold will continue its impressive climb or take a breather. The anticipation is for gold to test further resistances, particularly as it approaches the Fibonacci extension level at $2,057.05.
Daily Price Outlook
The EUR/USD currency pair extended its upward rally, marking the fifth consecutive session with a surge to around 1.1000 during the European session on Wednesday. However, the driving force behind this upward trend appears to be the weakened US Dollar, influenced by a less hawkish stance from the US Federal Reserve (Fed).
Meanwhile, traders appear hesitant to take strong positions as they closely monitor economic data from the European Central Bank (ECB) on Wednesday. Spain and Germany are expected to release preliminary Consumer Price Index (CPI) data for November, with both countries anticipated to report a slowdown in the annual inflation rate. Besides this, the European Commission is scheduled to release its Economic Sentiment Indicator.
Weakened US Dollar and Positive Economic Data Propel EUR/USD Pair Upward
The broad-based US dollar has been facing downward pressure around 102.60, desipite positive US economic data. It should be noted that the Housing Price Index for September beat expectations, showing a steady 0.6% increase, indicating a resilient and growing housing market.
Moreover, the US CB Consumer Confidence Index rose to 102.0 in November, up from the revised 99.1. However, the Greenback is impacted by falling US Treasury yields and comments from Fed Governor Christopher Waller, hinting at a flexible approach to interest rates if inflation decreases.
Therefore, the positive US economic data and the weakened US dollar contribute to an upward trend in the EUR/USD pair.
Market Focus: US Q3 GDP & Federal Reserve's Beige Book Release
Moving on, investors are turning their attention to the third-quarter preliminary Gross Domestic Product (GDP) Annualized figures in the US. Furthermore, the Federal Reserve is set to release the Beige Book later today, offering insights into the overall economic growth in the United States. These releases are likely to influence market sentiments and guide investment decisions.
EUR/USD - Technical Analysis
The EUR/USD pair is consolidating gains after its recent ascent, currently trading around the 1.10018 level. The currency is in a holding pattern, digesting its climb to levels not seen in 15 weeks, as it navigates the psychological 1.1000 threshold. The uptick is part of a broader risk-on sentiment in the market, which has pressured the US Dollar across the board.
The technical outlook for the pair remains constructive as it stabilizes above the 1.09642 mark, which is a key support level. On the upside, the immediate resistance is located at 1.10499, with further potential to test 1.11030 if the bullish momentum continues.
The Relative Strength Index (RSI) hovers around 66.03, suggesting that buying pressure remains, though the pair is not yet in the overbought territory. The RSI's current level indicates that the pair has room to extend gains before encountering overextended conditions.
Moreover, the 50-Day Exponential Moving Average (EMA) at 1.08553 acts as a dynamic support level, confirming the positive bias in the market. A sustained trade above this EMA will further bolster buyers' confidence.
In summary, the EUR/USD exhibits a bullish stance, with the potential to scale higher if it can maintain its foothold above immediate support levels. The pair's trajectory will likely be influenced by upcoming economic releases, including Eurozone consumer confidence and US GDP figures.
Daily Price Outlook
Despite downbeat Retail Sales data from the country, the AUD/USD currency pair maintained its upward trend and remained well bid around the 0.6625 level. However, the reason for its upward momentum could be attributed to the bearish US dollar, which marked its lowest point since late August on Tuesday. The prevailing trend continues to lean towards the downside, fueled by a dip in US Treasury yields, notably with the 2 and 10-year bond yields slipping to 4.86% and 4.39%, respectively.
Another factor supporting the AUD/USD currency pair could be the National Australia Bank (NAB), which anticipates another RBA rate hike and expects it to occur at the February 2024 meeting.
Australian Dollar (AUD) Resilience Amid Consumer Spending Dip and RBA Caution
It's worth noting that Australia's consumer spending, a key measure by the Australian Bureau of Statistics, fell 0.2% in October, contrary to the expected 0.1% rise. Despite this, the Australian Dollar gained strength due to positive market sentiment and the announcement of a Chinese stimulus plan.
Meanwhile, Australia's Reserve Bank Governor Michele Bullock highlighted that the current monetary policy is restrictive. She's cautious about raising interest rates too much because it might reduce demand and impact jobs, especially with ongoing services inflation.
Thereby, the minutes from the RBA's meeting revealed a "credible case" against an immediate rate hike, although there is thinking of tightening in response to escalating inflation risks. National Australia Bank (NAB) foresees a potential RBA rate hike, possibly in February 2024.
Governor Bullock expects inflation to decrease to just under 3.0% in 2025 but acknowledges uncertainty. Traders are awaiting Wednesday's Monthly Consumer Price Index (YoY) for more insights.
FOMC Minutes, US Economic Data, and Potential Impacts on AUD/USD Pair
Moreover, the latest Federal Open Market Committee (FOMC) meeting minutes indicated that if there isn't sufficient progress toward the inflation goal, they might contemplate tightening monetary policy. All FOMC members unanimously agree to maintain a relatively tight policy until there is clear evidence of inflation aligning with their target.
In other news, US New Home Sales dropped by 5.6% to 679K, missing the expected 725K.
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On Tuesday, the US Dollar Index (DXY) reached its lowest level since late August, propelled by a decrease in US Treasury yields, with 2 and 10-year bond yields slipping to 4.86% and 4.39%. Consequently, the AUD/USD pair might experience a positive influence as the USD weakens, attributed to the Federal Open Market Committee's (FOMC) cautious approach to tightening policy.
Furthermore, the prospect of a weaker USD may be exacerbated by disappointing US New Home Sales, thereby favoring the Australian Dollar.
In the upcoming week, the US is scheduled to release key data, notably the Housing Price Index and CB Consumer Confidence on Tuesday. Furthermore, speeches from Federal Reserve (Fed) officials are expected to offer insights into the central bank's perspective on the economy.
AUD/USD - Technical Analysis
In the realm of foreign exchange, the Australian Dollar (AUD) against the US Dollar (USD) presents an intriguing narrative of resilience and growth. As of today, the AUD/USD pair is trading around 0.66, marking a modest rise of 0.14% in the last 24 hours. This movement signifies a cautious but positive sentiment in the market towards the Australian currency.
The technical landscape for AUD/USD is defined by several key price levels. The current pivot point stands at 0.6648, a critical level for determining its immediate directional bias. The pair faces immediate resistance at 0.6707, followed by higher levels at 0.6765 and 0.6824. These resistance levels will play a significant role in deciding whether the AUD can extend its upward trajectory against the USD. On the flip side, support levels are noted at 0.6618, with additional supports at 0.6558 and 0.6528, crucial for cushioning any potential declines.
From a technical indicators perspective, the Relative Strength Index (RSI) for AUD/USD is at 67, hovering near the overbought threshold but still indicative of a bullish sentiment. This suggests that the pair may still have room for further upward movement. Additionally, the 50-Day Exponential Moving Average (EMA) is at 0.6600. The AUD/USD trading above this level reinforces the notion of a short-term bullish trend.
In conclusion, the overall trend for the AUD/USD pair appears bullish, particularly if it maintains above the 0.65872 level. The short-term outlook suggests that the pair might test higher resistance levels in the coming days. Investors and traders should closely monitor these levels, as breaking through either resistance or support could signal significant price movements for the Australian Dollar against its American counterpart.