ATFX Market Outlook 16th December 2024

ATFX Market Outlook 16th December 2024

Central Bank Bonanza: Key Rate Decisions Ahead from the Fed, BoJ, and BoE!

Opinion Today:

This week, attention turns to the Fed, BoJ, and BoE. Despite recent inflation data, the Fed is expected to cut rates by 25bps on Wednesday, with an 80% chance of a pause in January. Strong US economic performance suggests limited further cuts, which may pressure the dollar. The BoJ's chances of a rate hike this week have dropped to 25% in Japan, but a quarter-point increase is still likely by March next year, supporting the yen. The BoE, however, is seen as unlikely to cut rates soon, with only a 10% chance of a reduction next week. Overall, markets will focus on future rate signals from these central banks.

Last Friday, U.S. stocks closed nearly flat, with the S&P 500 and Dow Jones experiencing weekly declines of 0.64% and 1.82%, respectively, while the Nasdaq gained 0.34%. The dollar index hovered around 107, gaining nearly 1% for the week as investors anticipated a slower rate cut from the Federal Reserve. The dollar rose 0.69% against the yen to 153.695 and 2% for the week, though the pound fell 0.45% to 1.2616. The euro increased by 0.26% against the dollar to 1.04945.

Gold prices fell 1.23% last Friday to $2,648.39 an ounce but posted weekly gains due to expectations of a rate cut. Additionally, U.S. crude futures rose 1.8% to $71.29, the highest since November 7, with a 6% weekly gain.

Today, investors are watching for any impact on the euro from ECB President Lagarde's speech and German Chancellor Scholz's confidence vote in the Bundestag, which will guide the ECB rate path. They also focus on December's global manufacturing and service PMIs to check the economic health.

Key Data:

16:15 ECB President Speaks ***

16:30 EU Germany Manufacturing & Services PMI DEC ** 

17:00 EU Eurozone Manufacturing & Services PMI DEC **

17:30 GB Manufacturing & Services PMI DEC ** 

21:30 US NY Empire State Manufacturing Index DEC **

22:45 US Manufacturing & Services PMI DEC ** 

Tomorrow

21:30 US Retail Sales NOV *** 

21:30 CA CPI NOV *** 

EUR/USD

1.0551/1.0581 Resistance1.0454/1.0423 Support

Last Friday, the euro stopped its five-day losing streak against the U.S. dollar and recorded its biggest gain in over a week. Today's Asia trading session further tested the intersection of the leading moving averages on the daily chart where the previous trading day's high was located, which may create technical pressure. According to Moody's downgraded France's sovereign credit rating, investors should consider whether it will bring further downward pressure on the euro and whether the rate will return below the 1.0500 mark.

GBP/USD

1.2687/1.2734 Resistance1.2571/1.2533 Support

Data indicated that the UK economy unexpectedly contracted in October, suggesting a more considerable slowdown than anticipated. Consequently, GBP/USD fell to its lowest level since late November, dropping below the early month's low range. Watch for further downward momentum, approaching the November low, while keeping an eye on support levels at 1.2571 and 1.2533.

USD/JPY

154.38/154.76 Resistance153.23/152.74 Support

Reports indicate that the Bank of Japan may not raise interest rates at this week's meeting. Last Friday, the U.S. dollar rose against the yen for five days, reaching its highest level since late November. Attention now turns to whether it can surpass the 154 mark. If it encounters resistance, the trend line from mid-November may prompt a correction.

USD/CAD

1.4278/1.4302 Resistance1.4177/1.4148 Support

The USD/CAD pair rose last Friday, but momentum has significantly slowed. This morning, it has surrendered some gains. Due to this slowdown, watch for consolidation signals. The trend line since late November may act as resistance, and any pullback could target the 1.4200 mark or lower.

U.S Crude Oil Futures (January)

71.30/71.82 Resistance69.95/69.54 Support

Concerns about further sanctions on Russia and Iran may tighten supply, while interest rate cuts in Europe and the U.S. could boost fuel demand. Consequently, crude oil prices have stabilized after a two-week decline, with U.S. oil nearing its highest level since November 25. Today, prices opened sharply lower below $71, and it’s crucial to hold above $70 to maintain upward momentum.

Spot Gold

2683/2699 Resistance2630/2613 SupportSpot Silver30.93/31.15 Resistance30.24/30.02 Support

As the U.S. dollar strengthened, spot gold fell below $2,650 after two days of decline, moving away from its five-week high. This marks the first time it dipped below the key moving average support level in nearly a month. If it doesn’t recover today, it could drop further toward last week's low of $2,613.

US30

44076/44254 Resistance43713/43532 Support

U.S. stocks closed mixed last Friday, with the Dow Jones Industrial Average declining 1.82% for the week, reaching its lowest point since November 21. The index has encountered significant resistance above 44,000, raising concerns about a potential drop below 43,700. However, the Federal Reserve's cautious approach to an interest rate cut this week may help ease some downward pressure.

NAS100

21914/22041 Resistance21611/21513 Support

The Nasdaq index opened higher last Friday but ended the day with only a modest gain after a decline. This indicates a need for further news to sustain upward momentum. On the technical side, the trend line established since the November 11 peak acts as resistance. If the index stays below this level, it may face downward pressure, so watching for consolidation within the higher range is essential.

BTC (Bitcoin)

108124/109443 Resistance101943/100601 Support

Bitcoin reached a record high of $105,120.90, rising 3.9% due to increased trading by large investors and MicroStrategy's entry into the Nasdaq 100. With 27,000 Bitcoins moved off exchanges, supply has tightened. Over the past year, Bitcoin surged 50%, driven by optimism around Trump's trade policies and expected Fed rate cuts. However, investors should be wary of potential profit-taking before this week's FOMC meeting.

Enjoy trading! The content is for reference only. Please ensure that you understand the risk.

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