2023-12-18 17:42

OIL PRICE FORECAST: Oil Continues to Advance as Supply Concerns Intensify on Red Sea Attacks. Geopolitics Could be the Biggest Risk to Oil the Longer the Israel-Palestine Conflict Drags On. IG Client Sentiment Shows that 85% of Traders are Long at Present. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. Most Read: What is OPEC and What is Their Role in Global Markets? Oil rose as much as 3% today trading above the $73 a barrel handle following escalating tensions in the Red Sea. The attacks carried out by Houthis in Yemen as they push to end the offensive on Gaza which is now stretching toward a 3rd month. This is the first sign of an actual spillover in tensions that could affect Global Supply chains moving into 2024. RED SEA SUPPLY INTERRUPTION AND THREATS POSED The tensions around the Red Sea do not bode well for those who have wished that the war remain confined. This being the first sign that it may spread and affect the Global Economy, something which had been stressed by Central Bank bosses from the EU, Bank of England and the US Federal Reserve. All Central Bank heads cited their concern that the longer the war draws on the greater the likelihood of a spread which could have consequences from Global growth and the Global Economy. Just as it seems Central Banks are getting inflation under control, will the supply chain disruptions and a potential spread in the Middle East weigh on Global Markets heading into 2024? Well, if anything, these developments are likely to strengthen the belief that things may get worse in the early part of 2024. BP stated today that It has temporarily suspended all transits through the Red Sea. This was a response to a Norwegian Vessel was attacked earlier in the day with consumers now facing the prospect of shouldering increased transport costs and time constraints for refineries. The longer the war drags on the more chance I believe there is of disruptions around the Straight of Hormus as Iranian allies in the region continue to grow bolder. This could become a key feature and focus for the early part of 2024. LOOKING AHEAD TO THE REST OF THE WEEK Looking to the rest of the week and the Geopolitical risk is likely to be the key driver and the most important risk to pay attetion to. There is a bunch of data and from the US and inventories data as well which could also impact on Oil prices. TECHNICAL OUTLOOK AND FINAL THOUGHTS From a technical perspective WTI is attempting to close above the $73.35 mark which houses the 20-day MA with the next resistance area at the key psychological level at the $75 mark. There is also the descending trendline which could come into play at the $76.50-$77.00 area which would be the third touch of the trendline. Usually, this leads to a continuation of the trend but if the geopolitical situation remains strained we could see a break above and a push back toward the $80 mark. WTI Crude Oil Daily Chart – December 18, 2023 Source: TradingView Key Levels to Keep an Eye On: Support levels: 73.00 72.10 70.00 Resistance levels: 75.00 77.00 77.72 IG CLIENT SENTIMENT IG Client Sentiment data tells us that 83% of Traders are currently holding LONG positions. Given the contrarian view to client sentiment adopted here at DailyFX, does this mean we are destined to revisit the $70 a barrel mark? https://www.dailyfx.com/news/oil-price-forecast-oil-surges-on-supply-chain-concerns-as-red-sea-disruptions-intensify-20231218.html

2023-12-18 15:45

USD/JPY Analysis Bank of Japan unlikely to move on rates, inflation out on Friday USD/JPY counter-trend drift continues ahead of BoJ meeting and US PCE The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Bank of Japan Unlikely to Move on Rates, Inflation out on Friday The Bank of Japan (BoJ) will provide an update on monetary policy in the early hours of tomorrow morning but any hope of a policy pivot appears to have dried up in the last week. Last week Monday Bloomberg reported on a story in which it suggested the Bank of Japan is not looking to the December meeting when it comes to potential interest rate changes. This would make sense as Q1 ought to provide the bank with greater clarity on wage growth as the country’s largest labour unions negotiate yearly increases on January the 23rd, with the process due to be finalized in March – setting up Q2 as a more realistic time frame for a major policy change. Japanese inflation has breached the 2% target for over a year now but the bank is looking for reassurance that the underlying causes of inflation have transitioned from a supply side issue to demand driven factors. Recent drivers of USD/JPY price action can be linked to a narrowing yield differential (US 10-year yield minus the Japanese 10-year yield). The chart below depicts this relationship and it is clear to see that the pair follows this relationship rather closely. Recently, a sharper decline in US yields has improved the differential from a Japanese point of view. USD/JPY (Orange) with US-Japan Yield Differential (blue) Source: TradingView, prepared by Richard Snow USD/JPY Counter-Trend Drift Continues Ahead of BoJ Meeting USD/JPY continues to trade within the broader ascending channel but failed to break below a notable zone of support. The zone of support emerges at the lower bound of the ascending channel (support) and the August swing low of 141.50. In amongst the considerations is the 200-day simple moving average (SMA). The current landscape allows for well-defined levels of consideration should the pair pullback even further or head lower should the medium-term trend prevail. A move to the upside brings the 145 level into focus while the zone of support presents an immediate hurdle to the bearish continuation but a hawkish BoJ statement could result in a test of 138.20. Of course, market participants will be dissecting every word of the BoJ statement for clues that may narrow down the time frame of the anticipated policy reversal. However, the BoJ may decide to keep markets waiting a while longer. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/usd-jpy-setup-ahead-of-the-final-bank-of-japan-meeting-for-2023-20231218.html

2023-12-18 13:00

EUR/USD Forecast - Prices, Charts, and Analysis German manufacturing sentiment fell further in November. ECB’s Vasle pushes back on rate cut bets Learn How to Trade EUR/USD with our Complimentary Guide Most Read: Market Week Ahead: Gold Regains $2k, GBP/USD, EUR/USD Rally as USD Slides Sentiment in German business has ‘clouded over’ according to the latest Ifo report with companies ‘less satisfied with their current business’, and ‘more skeptical about the first half of 2024.’ Results for the Ifo December Business Survey show: In manufacturing, the Business Climate Index fell noticeably. Companies assessed their current business situation as significantly worse. Their expectations also grew more pessimistic. Energy-intensive industries are having a particularly tough time. Order books continue to shrink overall. In the service sector, the business climate improved slightly. Service providers were more satisfied with their current business. They also reported less skepticism in their outlook for the coming six months. In restaurants and catering, the business situation improved but expectations took a nosedive. In trade, the business climate suffered a setback. Companies assessed their current situation as markedly worse. Their expectations also darkened. For retailers, holiday trade is disappointing this year. In construction, the Business Climate Index fell to its lowest level since September 2005. Companies assessed their current situation as worse. Moreover, roughly one in two companies are expecting business to deteriorate further in the months ahead. ECB policymaker Bostjan Vasle today continued the central bank’s pushback against current interest rate expectations, saying that market expectations for rate cuts are premature and ‘inconsistent with the stance appropriate to return inflation to target.’ Current market pricing shows the first 25bp rate cut fully priced in at the April meeting with a total of 150 basis points of cuts seen through 2024. EUR/USD is trading in a tight 40 pip range so far today in quiet market conditions. On Tuesday we have the final Euro Area inflation reading – forecast at 3.6% vs 4.2% prior -while on Friday we have the Fed’s preferred inflation report, core PCE, released at 13:30 UK. Both releases have the ability to move EUR/USD in either direction. Initial support for the pair starts with the 23.6% Fibonacci retracement at 1.08645 followed by a prior level of horizontal support at 1.0787. Resistance at last Wednesday’s 1.1017 high followed by 1.1076. EUR/USD Daily Chart Chart Using TradingView IG retail trader data shows 47.56% of traders are net-long with the ratio of traders short to long at 1.10 to 1.The number of traders net-long is 7.28% higher than yesterday and 23.84% lower than last week, while the number of traders net-short is 8.03% higher than yesterday and 12.92% higher than last week. What is your view on the EURO – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/euro-eur-latest-german-ifo-highlights-ongoing-german-economic-weakness-ecb-rate-pushback-20231218.html

2023-12-18 11:00

Article by IG Senior Market Analyst Axel Rudolph FTSE 100, DAX 40, S&P 500: Analysis and Charts FTSE 100 muted after Friday’s sell-off Last week the FTSE 100 briefly made a near three-month high at 7,725 before slipping back to the 200-day simple moving average (SMA) at 7,561 despite UK rates remaining on hold but as three of nine voting Bank of England (BoE) Monetary Policy Members (MPC) voted for a further rate hike. A fall through Friday’s 7,547 low would put the mid-November and early December highs at 7,543 to 7,535 back on the cards. Resistance above the 8 December high at 7,583 can now be spotted around the 7,600 mark. FTSE 100 Daily Chart DAX 40 comes off last week’s record high Following six straight weeks of gains, which took the DAX 40 to its record high at around the 17,000 mark, it is leveling out ahead of today’s German Ifo business climate sentiment and Wednesday’s Gfk consumer confidence. Below the October-to-December uptrend line at 16,722 and last week’s low at 16,661 lies the July peak at 16,532 which should offer solid support. Resistance is seen around the 11 December high at 16,827 and at Friday’s 16,890 high ahead of last week’s peak at 17,003. DAX 40 Daily Chart S&P 500 flatlines The S&P’s steep advance on rate cut expectations has given way to low volatility trading below last week’s 4,739 near two-year high despite 'triple witching' of $5 trillion in expiring options colliding with index-rebalancing of the S&P 500 and the Nasdaq 100. While Thursday’s low at 4,694 underpins, the November and mid-December 2021 highs at 4,743 to 4,752 will remain in sight ahead of its all-time record high made in January 2022 at 4,817. Below 4,694 the March 2022 peak at 4,637 may act as support. While the last few weeks’ lows at 4,544 to 4,537 underpin, the medium-term uptrend will remain valid. S&P 500 Daily Chart https://www.dailyfx.com/news/ftse-100-dax-40-and-s-p-500-flatline-20231218.html

2023-12-18 08:45

GBP/USD Analysis and Charts US dollar rebound looks tepid. UK inflation data is now key for 2024 rate expectations. Most Read This Week: Market Week Ahead: Gold Regains $2k, GBP/USD, EUR/USD Rally as USD Slides Sterling retains most of last week’s gains as we head towards the festive break, with cable testing 1.2700 as the US dollar slips in early trade. The greenback picked up a bid on Friday after Federal Reserve voting members, John Williams and Raphael Bostic both pushed back against market expectations of a series of rate cuts next year. Mr. Williams said in an interview that the Fed ‘isn’t really talking about rate cuts right now’, while Mr. Bostic said that the US central bank will likely cut rates twice next year, starting ‘sometime in the third quarter’. Current market pricing sees the Fed cutting rates six times, starting in March, for a total of 150 basis points. While Friday’s remarks from Williams and Bostic reversed the recent US dollar sell-off, it is unlikely that the recent strength in the US dollar will last for too long. Ahead this week, the latest look at UK inflation and the final Q3 GDP report. UK inflation has been moving lower over the past months and a further move lower will increase pressure on BoE Governor Andrew Bailey to acknowledge that rates will move lower next year, in contrast to his hawkish tone at the last MPC meeting. GBP/USD is just under 1.2700 in early turnover after Friday’s sell-off. Support for the pair starts around 1.2630 down to 1.2600 and this should hold going into the end of the year. The recent multi-week high at 1.2791 and the 23.6% Fibonacci retracement at 1.2826 will provide resistance in the coming days. GBP/USD Daily Price Chart Retail trader GBP/USD data show 49.10% of traders are net-long with the ratio of traders short to long at 1.04 to 1.The number of traders net-long is 5.35% higher than yesterday and 8.44% lower than last week, while the number of traders net short is 5.86% higher than yesterday and 1.17% lower than last week. What Does Changing Retail Sentiment Mean for GBP/USD Price Action? Charts using TradingView What is your view on the British Pound – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1. https://www.dailyfx.com/news/british-pound-gbp-latest-gbp-usd-on-hold-ahead-of-inflation-report-20231218.html

2023-12-17 17:00

Market Week Ahead: Gold Regains $2k, GBP/USD, EUR/USD Rally as USD Slides Fed Stays Put, Sees Three Rate Cuts in 2024, Gold Prices Soar as Yields Plunge The Federal Reserve is set to implement a series of interest rate cuts next week, according to the latest Fed ‘dot plot’, with three 25bp moves seen in 2024, as the US central bank acknowledges that economic growth is likely to weaken going forward. Financial markets however are pricing in a more aggressive set of rate cuts with six 25bp moves seen next, with the first cut expected in late March. CME Fed Fund Probabilities Learn How to Trade the Most Liquid Currency Pair, EUR/USD In contrast to the Fed’s dovish pivot, the Bank of England and the European Central Bank both held their hawkish outlooks, despite prior expectations that both may gently ease back from their ongoing restrictive stance. Expectations of a series of rate cuts by both central banks next year were paired back but still point to much lower rates in 2024. Hawkish BoE Leaves Rates Unchanged – GBP/USD Breaks Above 1.2700 ECB Keep Rates Steady with Tentative Inflation Downgrades. EUR/USD Rises Equity markets continue to ride the wave of optimism with US indices hitting multi-year and all-time highs while in Europe the DAX printed a fresh all-time high. Positive risk sentiment continues to power the equity bull run although as we enter the final week before the Christmas/New Year break, volume turns sharply lower and risk appetite will likely wain. There are quite a few high-impact economic data releases on the calendar next week with UK and US inflation reports and the Bank of Japan policy meeting the standouts. Learn How to Trade Economic Releases and Market Events with our Free Guide Technical and Fundamental Forecasts – w/c December 18th British Pound Eyes Inflation and GDP Data – GBP/USD and EUR/GBP Forecasts The Bank of England this week reiterated their battle against inflation is far from over, leaving Sterling propped up by higher-for-longer rate expectations. Euro Forecast: EUR/GBP and EUR/JPY Face Support, EUR/USD to Rise? A rather hawkish ECB statement probably sits somewhere between the BoE and the Dovish Fed, keeping the euro supported. What is likely to drive euro pairs next week? Gold (XAU/USD)and Silver (XAG/USD) Jump on Dovish Fed Interest Rate Outlook Gold and silver turned early losses into respectable gains at the end of the week, driven by a dovish Federal Reserve outlook for the coming year. US Dollar in Peril with Core PCE on Deck, Setups on EUR/USD, GBP/USD, USD/JPY The November U.S. PCE report will be key for the U.S. dollar in the short term. Weaker-than-expected numbers could reinforce the greenback's recent decline, but strong numbers could trigger a bullish reversal. https://www.dailyfx.com/news/market-week-ahead-gold-regains-2k-gbp-usd-eur-usd-rally-as-usd-slides-20231217.html