2023-12-14 07:29

RAND TALKING POINTS & ANALYSIS Fed narrative changes leaving rand supported. SARB Quarterly Bulletin and US retail sales under the spotlight. USD/ZAR rising wedge breakout but yet to prove. Macro-economic fundamentals underpin almost all markets in the global economy via growth, inflation and employment – Get you FREE guide now! USD/ZAR FUNDAMENTAL BACKDROP The South African rand attempts to extend yesterday’s gains after the Fed decided to increase its rate cut forecast for 2024 by an additional 25bps. Although the central bank was expected to hold rates, the dovish response by Fed Chair Jerome Powell was hailed by risk assets across financial markets including most Emerging Market (EM) currencies. Key metrics cited by Mr. Powell were slowing GDP, softening inflation and a normalizing labor market. The focus moving forward from this point will be timing and size of upcoming rate cuts and where the Fed will end up settling between their forecasts for 2024 of -75bps and current money market pricing revealing -150bps. From a South African perspective, inflation data was clearly overshadowed yesterday but the actual data is encouraging for the South African Reserve Bank (SARB). A negative MoM print and a miss on YoY brings inflation back on the downward trend after recent upside surprises. TECHNICAL ANALYSIS USD/ZAR DAILY CHART Chart prepared by Warren Venketas, TradingView The daily USD/ZAR chart has broken below the rising wedge chart pattern (dashed black line) but is not confirmed in my opinion. I would want to see a confirmation close below the 200-day moving average (blue) which may then expose the 18.5000 psychological handle and potentially a retest of the long-term trendline support level (black). The current daily candle reflects a long lower wick and could see the pair pullback higher should it close in this fashion. Resistance levels: 19.0000 18.7759 50-day MA (yellow) Support levels: 200-day MA (blue) 18.5000 Trendline support https://www.dailyfx.com/news/forex-zar-price-update-rand-rallies-on-dovish-fed-wv-20231214.html

2023-12-13 23:35

US DOLLAR FORECAST - EUR/USD, USD/JPY, GBP/USD The U.S. dollar weakens across the board as the Federal Reserve signals numerous rate cuts for next year The FOMC’s dovish policy outlook sends Treasury yields tumbling This article focuses on the technical outlook for EUR/USD, USD/JPY and GBP/USD in the wake of the Fed’s tentative pivot Most Read: Fed Stays Put, Sees Three Rate Cuts in 2024; Gold Prices Soar as Yields Plunge The U.S. dollar, as measured by the DXY index, plummeted nearly 0.9% on Wednesday, dragged lower by the massive plunge in U.S. Treasury rates after the Federal Reserve’s guidance surprised on the dovish side, catching investors, who were anticipating a different outcome, off guard and on the wrong side of the trade. For context, the U.S. central bank today concluded its last meeting of the year. Although policymakers kept borrowing costs unchanged at multi-decade highs, they gave the first signs of an impending strategy pivot by embracing a more benevolent characterization of inflation and admitting that talk of rate cuts has begun. Will the US dollar keep falling or reverse higher? Get all the answers in our quarterly outlook! The Fed’s Summary of Economic Projection reinforced the view that a policy shift is on the horizon, with the dot plot showing 75 basis points of easing next year, far more than contemplated in September. While Wall Street’s rate-cut wagers have been extreme, the Fed's forecasts are slowly converging toward the market's outlook – this should be bearish for the greenback and yields moving into 2024. With the broader U.S. dollar in a tailspin, EUR/USD soared towards the 1.0900 handle while GBP/USD jumped past an important ceiling near 1.2600. Meanwhile, USD/JPY nosedived, rapidly falling towards its 200-day simple moving average – the last line of defense against a larger retreat. This article focuses on the technical outlook for major U.S. dollar pairs such as EUR/USD, USD/JPY and GBP/USD, examining key price levels after Wednesday’s outsize moves in the FX space. EUR/USD TECHNICAL ANALYSIS EUR/USD jumped on Wednesday, clearing technical resistance near 1.0830, corresponding to the 200-day simple moving average. If this bullish move is sustained in the coming days, the upside momentum could accelerate, setting the stage for a rally towards 1.0960, the 61.8% Fib retracement of the July/October decline. On further strength, attention would shift towards 1.1015, last month's high. On the other hand, if the upward impetus fades and prices resume their descent, the first support to monitor is located at 1.0830, but further losses could be in store for the pair on a push below this threshold, with the next area of interest at 1.0765. Continued weakness might draw focus towards trendline support, currently traversing the 1.0640 region. EUR/USD TECHNICAL CHART EUR/USD Chart Prepared Using TradingView USD/JPY TECHNICAL ANALYSIS USD/JPY saw an upward push earlier this week, but this ascent hit an abrupt halt on Wednesday when the Fed triggered a massive U.S. dollar selloff. This drove the pair sharply lower, sending the exchange rate towards its 200-day SMA, the next major floor to watch. Bulls will need to staunchly defend this floor; failure to do so could spark a drop towards 141.70 and 140.70 thereafter. Conversely, if USD/JPY resumes its rebound, technical resistance looms at 144.50. Buyers may have a difficult time breaching this barrier, but if they manage to drive prices above this ceiling, we could see a rally towards the 146.00 handle. On further strength, all eyes will be on 147.20. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView Keen to understand the role of retail positioning in GBP/USD’s price action dynamics? Our sentiment guide delivers all the essential insights. Get your free copy now! GBP/USD TECHNICAL ANALYSIS GBP/USD climbed and pushed past resistance at 1.2590 on Wednesday after bouncing off trendline support near 1.2500, with the advance reinforced by the broader U.S. dollar downturn. If the pair manages to hold onto recent gains and consolidates to the upside little by little, we could soon see a retest of 1.2720 level, the 61.8% Fib of the July/October retracement. Further up, all eyes will be on 1.2800. On the other hand, if sellers return and trigger a bearish reversal, initial support appears at 1.2590, followed by 1.2500, near the 200-day simple moving average. Looking lower, the focus turns to 1.2455. Cable is likely to stabilize in this region on a pullback before mounting a possible comeback, but in the event of a breakdown, a move down to 1.2340 becomes a plausible scenario. GBP/USD TECHNICAL CHART GBP/USD Chart Created Using TradingView https://www.dailyfx.com/news/forex-usd-dollar-sinks-on-fed-dovish-pivot-setups-on-eur-usd-usd-jpy-gbp-usd-20231213.html

2023-12-13 19:15

FOMC INTEREST RATE DECISION KEY POINTS The Federal Reserve keeps borrowing costs unchanged in their present range of 5.25% to 5.50%, in line with expectations The dot plot sees 75 basis points of easing in 2024, a little less than current market pricing but moving in that direction Gold and the U.S. dollar take different routes after the FOMC announcement hits the wires Most Read: US Dollar Sinks on Fed Dovish Pivot, Setups on EUR/USD, USD/JPY, GBP/USD The Federal Reserve today concluded its final monetary policy gathering of 2023, voting unanimously to keep its benchmark interest rate unchanged within the current range of 5.25% to 5.50%, broadly in line with Wall Street expectations. The decision to maintain the status quo for the third straight meeting is part of a strategy to proceed more cautiously in the later stages of the fight against inflation, as risks have become more balanced and two-sided after having already delivered 525 basis points of cumulative tightening since 2022. Focusing on the FOMC statement, the institution downgraded its view on economic activity, acknowledging that recent indicators point to modest growth, but affirmed confidence in the labor market by noting that employment gains have been strong despite moderation since earlier in the year. In addressing consumer prices, the communique tweaked its previous characterization, saying that “inflation remains elevated” while adding that the trend has eased over the past year, a vote of confidence in the outlook. Shifting focus to forward guidance, the Fed retained a modest tightening bias, though the language reflected less conviction in this scenario by including the word “any” in its message of “in determining the extent of any additional policy firming that may be appropriate”. This is a sign that the hiking campaign is indeed over. FED SUMMARY OF ECONOMIC PROJECTIONS GDP, UNEMPLOYMENT RATE AND CORE PCE The December Summary of Economic Projections revealed important revisions compared to the quarterly estimates submitted in September. First off, 2023 gross domestic product was revised upwards to 2.6% from 2.1% previously. For next year, the forecast was marked down modestly to 1.4% from 1.5%, still indicating no recession on the horizon. Turning to the labor market, the outlook for the unemployment rate for this and next year remained unchanged at 3.8% and 4.1%, respectively, reflecting faith in the economy's ability to keep job losses contained. Regarding core PCE, the Fed’s favorite inflation gauge is now seen ending the year at 3.2 %, well below the 3.7% projection issued three months earlier. In 2024, this indicator is predicted to fall to 2.4%, a bit lower than the 2.6% previous estimate. FED DOT PLOT The dot plot, which illustrates the expected trajectory of interest rates over several years as viewed by Federal Reserve officials, underwent several notable modifications. In September, policymakers projected borrowing costs would end 2023 at 5.6% (5.50%-5.75%), but they are now finishing the year at 5.4% (5.25%-5.50%), with the central bank on pause over the past few meetings. Also at that point, the Fed anticipated a policy stance of 5.1% in 2024, implying 50 basis points of easing from the peak rate. In the December’s projections revealed today, officials see the target range falling to 4.6% (4.50%-4.75%) in 2024. This implies 75 basis points of easing, but from a lower terminal rate. Markets were pricing in about 106 basis points of rate cuts over the next 12 months before today’s announcement, so the Fed’s outlook is slowly converging towards that scenario. The following table provides a summary of the Federal Reserve's updated macroeconomic projections. Source: Federal Reserve Eager to gain insights into gold's outlook? Get the answers you are looking for in our complimentary quarterly trading guide. Request a copy now! Immediately after the FOMC announcement crossed the wires, gold prices shot higher and extended their session’s advance, as Treasury yields and the U.S. dollar came under strong downward pressure as the Fed projected three standard quarter-point interest rate cuts for the following year and adopted a more balanced view on inflation. With the U.S. central bank starting to embrace a more dovish stance, today’s market moves could consolidate in the near term, but for greater clarity on the outlook, traders should closely follow Chairman Powell's press conference. US DOLLAR, YIELDS AND GOLD PRICES CHART Source: TradingView https://www.dailyfx.com/news/forex-fed-stays-put-sees-limited-cuts-in-2024-gold-and-us-dollar-take-split-paths-20231213.html

2023-12-13 17:33

OIL PRICE FORECAST: Oil Rose as Much as 1.4% as OPEC + Blame Exaggerated Demand Concerns for Price Drop. OPEC+ Maintain Upbeat Forecasts for 2024 with Record Demand Expected. IEA Forecast Due Tomorrow to Provide Another Take on the 2024 Demand Picture. 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 shook off an early day slump to rally during the latter half of the European session to trade around 1.37% higher on the day and eyeing the $70 a barrel mark. There were a host of fundamental factors at play today with the announcement of the COP28 deal out of the UAE drowned it appears by comments from OPEC+ on its 2024 outlook. COP28 DEAL AND OPEC+ FORECASTS The COP28 climate meeting in the UAE finally reached an agreement today with representatives from 200+ countries ratifying it. The agreement is for the reduction of global consumption of fossil fuels to avert the worst of climate change, signaling the eventual end of the oil age. This is obviously still some way away with Oil, Gas and Coal still accounting for about 80% of the world's energy, and projections vary widely about when global demand will finally hit its peak. There were concerns regarding the reaction of OPEC+ members and Gulf States and whether they would be supportive of the measures with Saudi Arabia a particular concern. According to a source familiar with the matter, the Saudi position is that it sees “"a menu where every country can follow its own pathway," saying it "shows the various tracks that will allow us to maintain the objective of 1.5 (degrees Celsius) in accordance with the characteristics of every nation and in the context of sustainable development." There has been this ongoing debate particularly in the developing world around the phasing out of fossil fuels with many countries finding it tough. This is likely to remain the case in Developing countries who will need the most support if anything meaningful is to be achieved. OPEC+ today also doubled down on its own forecasts for 2024 while the US EIA lowered its 2024 Brent despite output cuts. OPEC+ also lifted its estimate of 2023 global economic growth based on its latest monthly report released earlier today. The Cartel forecast that Oil demand will grow by 2.2 million barrels a day next year with the OPEC secretariat cautiously optimistic about the fundamental factors affecting Oil market dynamics in 2024. The cartel has earmarked the continued recovery in China and a better performance from Europe as actors influencing its estimates while saying OECD countries are not expected exceed 2019 demand levels. OPEC+ were also quick to attribute the recent drop in Oil prices on exaggerated demand concerns which affected sentiment. Given the positive outlook on demand in 2024 it will be interesting to see what the IEA updated forecast reveals when released tomorrow. There have been diverging outlooks between the IEA and OPEC regarding 2024 and I will be keeping an eye on how significant the discrepancies are. LOOKING AHEAD Looking to the rest of the week and later this evening we have the FOMC meeting which could have a huge impact on overall sentiment. Tomorrow, we have IEA updated forecasts which could impact Oil prices as well as US retail sales and jobless claims numbers which could affect the US Dollar and thus Oil prices. TECHNICAL OUTLOOK AND FINAL THOUGHTS From a technical perspective WTI remains vulnerable below the $70 a barrel mark with support resting around the $67 handle. This of course is a key area of support where we had printed a triple bottom pattern in May and June before the explosive move to the upside began. Today we printed a low around 67.70 before rebounding aggressively but we do need acceptance above the $70 a barrel mark for the recovery to continue. A break back above the $70 a barrel mark immediate resistance rests at $72.15 and just above at the $73.06 handle. A daily candle close above the swing high at 71.50 will see the a change in structure and embolden bulls even further and help speed up a recovery in prices. WTI Crude Oil Daily Chart – December 13, 2023 Source: TradingView Key Levels to Keep an Eye On: Support levels: 68.25 67.74 67.00 Resistance levels: 70.12 72.15 73.06 IG CLIENT SENTIMENT IG Client Sentiment data tells us that 89% 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 lows at the $67 mark? https://www.dailyfx.com/news/oil-price-forecast-oil-rises-as-opec-predicts-record-demand-in-2024-20231213.html

2023-12-13 15:58

EUR/USD ANALYSIS Weak euro area economic data has left the euro vulnerable. Will elevated US inflation prompt EUR selloff? EUR/USD approaches key support zone. EURO FUNDAMENTAL BACKDROP The rest of the trading day will be dominated by US factors, chiefly the Federal Reserve’s interest rate announcement. Post-PPI, cumulative rate cuts by the Fed for 2024 have increased roughly 6bps to 116bps shown below. Although the Fed is seeing improvement in its goal to quell inflationary pressures, easing too quickly could undo much of the progress. Fed Chair Jerome Powell is likely to pushback against rate cut forecasts (a strategy I believe the European Central Bank (ECB) will adopt as well). IMPLIED FED FUNDS FUTURES Source: Refinitiv TECHNICAL ANALYSIS EUR/USD 4-HOUR CHART Chart prepared by Warren Venketas, IG The 4-hour EUR/USD chart above shows two potential bearish indications including a rising wedge pattern as well as a looming death cross (blue). That being said, the Relative Strength Index (RSI) on both short and longer term time frames remain around the midpoint 50 level, suggestive of hesitancy by EUR/USD traders. Fundamental and technical analysis as outlined above seems to favor the downside short-term, with the long-term trendline support (black) the first port of call for bears. Resistance levels: 1.0900 Wedge resistance 1.0800/50-MA (4-hour) Support levels: 200 MA (4-hour) Wedge support Trendline support IG CLIENT SENTIMENT DATA: BULLISH IGCS shows retail traders are currently neither NET LONG on EUR/USD, with 55% of traders currently holding long positions (as of this writing). https://www.dailyfx.com/news/forex-euro-price-forecast-eur-usd-bid-post-ppi-as-fomc-looms-wv-20231213.html

2023-12-13 13:01

Gold (XAU/USD) Analysis, Outlook, and Charts Market pricing suggests that the Fed will start cutting interest rates in May next year. Updated economic forecasts on inflation, growth, and unemployment will be key going forward. Most Read: US Dollar on Edge Before Fed Decision, Technical Setups on EUR/USD and GBP/USD The Federal Reserve is expected to leave interest rates untouched for the third meeting in a row later today as inflation in the US continues to fall. Chair Powell has remained adamant that the US central bank would hike rates if necessary over the past few meetings, and in other prepared commentary, but he may well ease back on this rhetoric today, suggesting that rates will be on their way down next year. The Fed has pushed back against market pricing of a series of rate cuts over the last few weeks and any change of course by the US central bank will be closely watched. Chair Powell will have the benefit of having seen the latest quarterly inflation, growth, and unemployment forecasts ahead of the policy decision, and these are likely to steer the meeting’s narrative. It is highly unlikely that Chair Powell will say when rate cuts will start next year, leaving himself and the Fed with maximum flexibility, but any hint will embolden bond traders and other rate-sensitive markets. Against this background of lower US interest rates, gold should be pushing higher, but that is not the case. The precious metal has fallen away sharply after hitting a spike high of $2,147/oz. on December 4th.. and is back below the 20-day simple moving average (sma) and is currently testing the 50-day sma. Below here lies prior horizontal support at $1,960/oz. and the long-dated sma is currently at $1,953.5/oz. The recent pattern of higher lows and higher highs remains in place, adding a layer of support for gold, while the CCI indicator shows the precious metal as oversold. Learn How to Trade Gold with our Complimentary Guide Gold Daily Price Chart – December 13, 2023 Chart via TradingView Retail trader data shows 62.17% of traders are net-long with the ratio of traders long to short at 1.64 to 1.The number of traders net-long is 6.42% lower than yesterday and 0.86% higher than last week, while the number of traders net-short is 2.44% higher than yesterday and 13.62% lower than last week. See how changes in IG Retail Trader data can affect price action. Charts via TradingView What is your view on Gold – 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/gold-xau-usd-struggles-to-find-support-ahead-of-eagerly-awaited-fomc-decision-20231213.html