Posted at 18 December 2023 / Categories Market Roundups
Market Roundup
•German Dec Business Expectations 84.3, 85.8 forecast, 85.2 previous
•German Dec Ifo Business Climate Index 86.4, 87.8 forecast,87.3 previous
•German Dec Current Assessment 88.5, 89.5 forecast,89.4 previous
Looking Ahead Economic Data(GMT)
•13:30 Canada Nov New Housing Price Index (MoM) 0.1% forecast, 0.0% previous
•13:55 French 12-Month BTF Auction 3.423% previous
•13:55 French 3-Month BTF Auction 3.778% previous
•13:55 French 6-Month BTF Auction 3.739% previous
•15:00 US Dec NAHB Housing Market Index 36 forecast, 34 previous
Looking Ahead Events And Other Releases(GMT)
•15:00 EU ECB's Lane Speaks
Currency Forecast
EUR/USD: The euro gained on Monday but gains were limited as downturn in the bloc's business activity deepened more than expected in December, indicating the economy is likely in recession. To glean further insights into the state of the global monetary policy cycle, investors will closely observe key indicators throughout the week. This includes monitoring the euro zone's November consumer prices, the central bank decision in Japan, and the Federal Reserve's preferred inflation gauge, the personal consumption expenditure for November. These data points are expected to provide valuable clues about the direction of monetary policies worldwide. The dollar index was last down 0.16% at 102.44 , having lost 1.3% last week. Immediate resistance can be seen at 1.0931(38.2%fib), an upside break can trigger rise towards 1.1000(Psychological level).On the downside, immediate support is seen at 1.0893 (5DMA), a break below could take the pair towards 1.0845(50%fib).
GBP/USD: Sterling eased against dollar on Monday as investors considered the likelihood of interest rates remaining higher in Britain than in most other major economies next year.The Bank of England last week pushed back against market pricing that shows investors see a strong chance of a first rate cut by May. A rate cut in June is now fully priced in. The UK economy, meanwhile, is flat-lining and economic output is back at levels registered in January.But the economy has avoided recession so far and a reading of business activity last week showed a surprise pick-up in growth and a small slowdown in price pressures in the services sector in early December. Expectations that UK rates will have to stay higher for longer than those elsewhere have acted as a tailwind for the pound for most of this year. Immediate resistance can be seen at 1.2679 (38.2%fib), an upside break can trigger rise towards 1.2786(23.6%fib).On the downside, immediate support is seen at 1.2616(5DMA), a break below could take the pair towards 1.2590(50%fib).
USD/CHF: The U.S. dollar edged lower against Swiss franc on Monday as investors eagerly anticipated U.S. inflation data scheduled for later this week to gain further insights into the Federal Reserve's stance on interest rates. Last week, the Federal Reserve opted to maintain interest rates, signaling the conclusion of the extensive tightening of monetary policy implemented over the past two years and hinting at anticipated lower borrowing costs in 2024.Contrary to the surging market expectations of rate cuts, New York Fed President John Williams emphasized that discussions about rate cuts are not currently underway at the Fed, deeming it premature to speculate about such measures. Immediate resistance can be seen at 0.8705(5DMA), an upside break can trigger rise towards 0.8744(5DMA).On the downside, immediate support is seen at 0.8655 (23.6%fib), a break below could take the pair towards 0.8600(Psychological level)
USD/JPY: The greenback strengthened against yen on Monday as the Bank of Japan (BOJ) kicked off a two-day meeting that could be crucial in determining the timing of the end of the central bank’s ultra-loose stance on interest rates. The Japanese currency has had a volatile few weeks, as markets struggle to get a grip on how soon the BOJ could phase out its negative interest rate policy, with comments from Governor Kazuo Ueda this month initially sparking a huge rally in the yen.That was later reversed on news that a policy shift was unlikely to come as early as December, and investors now await Tuesday's BOJ decision for further clarity on the bank's rate outlook.Strong resistance can be seen at 142.32(38.2%fib),an upside break can trigger rise towards 143.88(50%fib).On the downside, immediate support is seen 141.02(Dec 15th low)a break below could take the pair towards 140.31(23.6%fib).
Equities Recap
European equities dipped on Monday following a robust week of gains, as car and luxury sectors sank, and remarks from key central bank officials dampened expectations of early interest rate reduction.
UK's benchmark FTSE 100 was down by 0.65 percent, Germany's Dax was down by 0.40 percent, France’s CAC was up by 0.29 percent.
Commodities Recap
Gold edged higher on Monday, supported by a weakness in bond yields as investors await U.S. inflation data due later this week for more clarity on the Federal Reserve's interest rate path after a dovish pivot last week.
Spot gold was up 0.3% at $2,023.29 per ounce, as of 0312 GMT. U.S. gold futures edged 0.1% higher to $2,037.10.
Oil rose on Monday as attacks by the Houthis on ships in the Red Sea raised concerns of oil supply disruptions, although scepticism around Russia's plan to cut exports in December limited gains.
Brent crude futures were up 62 cents, or 0.8%, to $77.17 a barrel by 1150 GMT, while U.S. West Texas Intermediate crude rose 47 cents, or 0.7%, to $71.90.