ATFX Market Outlook 12th December 2024

ATFX Market Outlook 12th December 2024

Inflation Surges in the US, Eyes on ECB: Will Rates Retake a Cut?

Opinion Today:

In November, the US Consumer Price Index (CPI) saw a month-on-month increase, like in July, but the Federal Reserve is still expected to cut interest rates for the third time next week. On Wednesday, the S&P 500 index rose significantly, driven by technology stocks that pushed the Nasdaq to a new high. The Dow futures trade closed fell 0.22%, but the S&P 500 increased by 0.82%, and the Nasdaq rose by 1.77%.

The US dollar index climbed 0.329% to 106.7, with the dollar strengthening against the yen and the euro falling to 1.0492. Gold prices increased by 0.9% to $2,717.93 per ounce as inflation data supported the expectation of a rate cut. The European Union also imposed new sanctions on Russian oil exports, potentially tightening global supplies.

The European Central Bank (ECB) will announce its interest rate decision today, likely cutting rates by 25 basis points due to a weak eurozone economy. Attention will be on whether the ECB will adjust its economic and inflation forecasts, which could imply ongoing substantial rate cuts next year and additional downward pressure on the euro. In the U.S., initial jobless claims are expected to decrease slightly to 220,000, down from 224,000.

Key Data:

16:30 SNB Interest Rate Decision *** 

17:00 IEA Monthly Outlook Report ** 

21:15 ECB Interest Rate Decision *** 

21:30 US Initial Jobless Claims & PPI NOV *** 

21:45 ECB Press Conference *** 

Tomorrow

15:00 GB Trade Balance OCT ** 

18:00 EU Industrial Production OCT ** 

21:30 US Export & Import Prices NOV **

EUR/USD

1.0552/1.0582 Resistance1.0454/1.0423 Support

The euro fell against the US dollar for four consecutive days, the first time in nearly a month and the most significant drop in two weeks. The major moving averages on the daily chart converged around 1.0530, now acting as resistance. Keep an eye on the exchange rate as it approaches last week's low of 1.0470, especially following the ECB's unexpected interest rate cuts. It may drop below 1.0450.

GBP/USD

1.2804/1.2831 Resistance1.2716/1.2682 Support

The GBP/USD pair continued its downward trend yesterday, with the 10-day moving average serving as intraday support. It may recover to the 1.2800 mark if it holds above this average. However, a drop below could test support at approximately 1.2716.

USD/JPY

152.74/153.23 Resistance151.47/151.09 Support

The USD/JPY pair gained three times yesterday, reaching its highest point since late November, but encountered resistance at the 20-day moving average of 152.26. A pullback may occur if it doesn't break this level today, targeting the 10-day moving average support around 151. Overall, trading is expected to remain within the range of these two moving averages.

USD/CAD

1.4177/1.4201 Resistance1.4101/1.4077 Support

The Bank of Canada cut interest rates by 50 basis points on Wednesday, citing uncertainties related to Trump's potential tariffs and indicating that future cuts will be gradual. The USD/CAD pair reversed from its intra-week high, hitting resistance near 1.4200. Investors should focus on consolidation signals and look for support around the 10-day moving average.

U.S Crude Oil Futures (January)

70.87/71.30 Resistance69.54/69.12 Support

The European Union will impose new sanctions on Russian oil exports, which may tighten global crude oil supply. Meanwhile, OPEC has lowered its oil demand growth forecast for the fifth time. Crude oil prices rose over 2% overnight, the most significant increase in three weeks, and must stay above $70, with resistance between $70.50 and $71.40.

Spot Gold

2734/2749 Resistance2704/2691 SupportSpot Silver32.27/32.49 Resistance31.58/31.37 Support

The US November CPI data met expectations, boosting the chances of a Federal Reserve rate cut next week. Spot gold has gained for three days, reaching over $2,720 and slightly surpassing its November 6 high. To continue its upward trend toward $2,760, gold needs to break through the $2,730 resistance level.

US30

44481/44659 Resistance43894/43713 Support

The three major U.S. stock indexes closed mixed on Wednesday. After the inflation announcement, the Dow futures did not follow the market's optimism regarding potential interest rate cuts, marking its first five-day decline since May. It has fallen below the 20-day moving average, indicating continued downward pressure below the 44,000 mark. Investors will also be monitoring the performance of the U.S. PPI throughout the day.

NAS100

21919/22047 Resistance21614/21515 Support

Large technology stocks soared overnight, pushing the Nasdaq to a new high. The latest U.S. inflation report raised hopes for a Federal Reserve interest rate cut, helping the Nasdaq end a two-day decline. Investors will be watching to see if it can continue towards the next level of 22,000.

BTC (Bitcoin)

103656/104999 Resistance99234/97868 Support

Bitcoin pushes past $100K as CPI data stirs crypto market rally. The CPI data aligned with expectations as market participants anticipate a 25bps interest rate cut by the Fed next week. A potential rate cut by the Fed could boost demand for risk assets like cryptocurrencies as investors begin favouring higher-yield investment products. This is evident in Bitcoin's 6% rebound above $100K on Wednesday following the CPI release. On the technical side, if the BTC holds a support level of around $98K and $96K, it could remain upward.

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