Indices and Bonds Yields
The US equity futures recouped some of their losses triggered by the Fed’s chair’s hawkish statements last week. Powell welcomed the inflation level’s fall in the last two months (Oct -Nov) however, the central bank’s boss was clear about maintaining a tight monetary policy (at a slower pace) until bringing the inflation rate back to 2%.
The Fed’s tight policy weighed on bond and stock prices while the two-year yields steadied at 4.23% higher than the 10-year yields currently at 3.67%. A negative spread in favor of the shorter bonds yield reflects a yield curve inversion and highlights that the US economy is heading into a recession.
Major FX Currencies
There is no significant data release nor any Fed member speech until the end of the year that may cause a significant move in the US Dollar index.
Technically, a daily close below 103.83 may entice traders to press toward 102.91 and 101.69 respectively, while a daily close above 104.42 opens the door to a further rally toward 108.11.
The EUR/USD has settled above the threshold of 1.0600, and similarly to the US dollar, no major movements are expected during the holiday season.
Technically, a daily close below 1.0559 may encourage the EUR/USD traders to press toward 1.0503 and 1.0415 respectively, while a daily close above 1.0658 opens the door to a further rally toward the area between 1.0730 and 1.0783.
The Gold price benefited from a weaker US dollar and broke above $1,800/oz as some traders exited some of their US dollar long positions and gold short positions.
Technically, The gold price closed yesterday above 1807 thus it could be on the way for a test of 1831 and 1848. Otherwise, a daily close below 1807 may encourage traders to press the price toward 1765.
The oil price maintained this week’s gains on reports of a possible fall in the US oil inventories. This data will be released today at 7:30 pm UAE time.
Technically, the WTI crude price trades above 74.97 and could be on the way toward 79.82. Nonetheless, a daily close below 74.97 opens the door for a further fall toward 68.08.
Chart of The Day: GBP/USD Daily Price Chart
Chart Source: ThinkTrader
On December 14, the GBP/USD hit a multi-month high at 1.2446 then the bullish trend lost momentum as some traders exited the market. It is noteworthy that the price rebounded on multiple occasions from the simple moving average (200-Day) and then developed a head and shoulders pattern where the neckline resides at 1.2070. The pair could fall towards 1.1700 if breaks and remains trading below the neckline’s level.
Currently, the GBP/USD moves in the area between 1.2380 - 1.1873 and a daily close above the high end of it could encourage traders to rally the price towards 1.2550 and 1.2775, respectively. On the other hand, a daily close below the low end of that area may trigger a sell-off towards 1.1476. However, the support level at 1.1760 should be considered.
Markets expect Canadian inflation levels (Nov) at 5:30 PM UAE time followed by the US consumer confidence index data (Dec) at 7:00 PM.
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