2023-12-12 15:38

WTI Oil News and Analysis Phasing out fossil fuels proves a tricky topic to agree on WTI prices threaten to extend the bearish trend after short period of consolidation WTI sentiment suggests further selling ahead as trader positioning is massively long The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Phasing out Fossil Fuels Proves a Tricky Topic to Agree on The COP28 climate summit extended on Monday into the early hours of Tuesday, as participating nations attempt to agree on a global plan of action to limit climate change in a timely manner to avoid severe weather events. On Monday a draft text was released and sparked a thorough debate, sending the discussions into overtime on Monday. The initial guidance was presented in order to gauge potential stumbling blocks and ‘deal breakers’ regarding the phasing out of fossil fuels. There is yet to be general agreement on the phasing out of fossil fuels and there would need to be consensus in this regard. Tuesday also marked the day when US CPI was due for release and the data showed CPI printing in line with estimates for both headline and core measures but month on month inflation surprised slightly to the upside. The dollar regained some lost ground in the aftermath but the month on month print is unlikely to outweigh the longer-term trend of falling inflation. Next up is the FOMC meeting on Wednesday. Oil Prices Threaten to Extend Bearish Trend after Short Period of Consolidation Oil continues to trade well below the 200-day simple moving average (SMA) and now threatens to invalidate the morning star pattern that had formed since Wednesday last week. The low of the pattern is currently being tested with the RSI heading quickly towards oversold conditions again. The next level of support appears at $67, which was previously the underside of the price range identified by the Biden administration to refill depleted SPR storage. This coincides with the price level just before Saudi Arabia instituted its voluntary supply cuts. Resistance is at $72.50, followed by $77.40. FOMC is the next major event and markets will scrutinize the Feds growth projections. The global growth slowdown continues to see oil prices trend lower and confirmation of slowing growth could see even more WTI selling. WTI Oil Daily Chart Source: TradingView, prepared by Richard Snow IG Client Sentiment Points to Bearish Continuation as Traders Remain Massively Long Source: TradingView, prepared by Richard Snow Oil- US Crude:Retail trader data shows 86.55% of traders are net-long with the ratio of traders long to short at 6.44 to 1. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggestsOil- US Crude prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Oil - US Crude-bearish contrarian trading bias. https://www.dailyfx.com/news/wti-oil-continues-to-weaken-as-cop28-deal-fails-to-find-consensus-20231212.html

2023-12-12 13:52

US CPI KEY POINTS: Core Inflation Rate YoY (NOV) 4% % Vs 4% Forecast. Inflation Rate YoY (NOV) 3.1% Vs 3.1% Forecast. Inflation Rate MoM 0.1% and Core Inflation Rate MoM 0.3%. To Learn More About Price Action, Chart Patterns and Moving Averages, Check out the DailyFX Education Section. US headline inflation YoY in November declined to 3.1%, in line with estimates while Core CPI YoY remained steady at 4%, the U.S. Bureau of Labor Statistics reported today. The print is the lowest headline reading in 5 months and continues the downward trend of late. The concern and what is likely to keep the current Fed rhetoric going is the slight increase from the MoM print and the Core MoM figure which came in at 0.1% and 0.3% respectively. Energy costs dropped 5.4% (vs -4.5% in October), with gasoline declining 8.9%, utility (piped) gas service falling 10.4% and fuel oil sinking 24.8%. The food index increased 0.2 percent in November, after rising 0.3 percent in October. The index for food at home increased 0.1 percent over the month and the index for food away from home rose 0.4 percent. The index for all items less food and energy rose 0.3 percent in November, after rising 0.2 percent in October. Indexes which increased in November include rent, owners’ equivalent rent, medical care, and motor vehicle insurance. The indexes for apparel, household furnishings and operations, communication, and recreation were among those that decreased over the month. Source: US Bureau of Labor Statistics, CarbonFinance FOMC MEETING AND BEYOND The data out today was always unlikely to have a material impact on the Fed decision tomorrow. The data being largely in line with expectations, the slight uptick in underlying inflation may lead the Fed to push back on the growing narrative of rate cuts in 2024. Fed swaps post the data release pricing in slightly higher odds of rate cuts while futures contracts tied to Fed policy price in rate cuts as early as March 2024. Given that the Fed is expected to keep rates on hold much like the ECB, focus will be on comments by Chair Powell and any revisions to the economic outlook. Markets will wait with bated breath to hear if there is any pushback from the Fed regarding the rate cut expectations priced in by market participants. The deviation of Fed and Market expectations will likely drive the US dollar and risk appetite following the FOMC meeting and could set the tone for the early weeks of 2024 as well. MARKET REACTION US Dollar Index (DXY) Daily Chart Source: TradingView, prepared by Zain Vawda The initial reaction saw the Dollar Index retreat and a rise in risk assets as markets were pricing in rate cuts as early as March 2024. However as market participants perused the data i am guessing the increase in the MoM and Core MoM prints has helped the Dollar regain some strength and risk assets surrender earlier gains. The futures contracts also repricing Fed rate cuts down to May 2024. The DXY remains confined in a range at present between the 20 and 200-day MAs providing support and the resistance area and 100-day MA to the upside resting at the 104.30-104.50 handles. The FOMC meeting tomorrow may provide a catalyst, however this will depend on the tone and updated Fed projections and how they compare to the current market expectations when it comes to rate cuts in 2024. https://www.dailyfx.com/news/us-inflation-in-line-with-estimates-but-mom-cpi-rises-dxy-ticks-higher-20231212.html

2023-12-12 12:58

RAND TALKING POINTS & ANALYSIS Improving South African production helps buoy rand. Can US CPI influence Fed narrative? USD/ZAR rising wedge still in play. 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 kicked off the European session on the front foot on the back of a weaker USD as well as some positive South African specific economic data (see calendar below). Gold, mining and manufacturing production all surprised to the upside YoY for October while markets prepare themselves for the upcoming US CPI report. US inflation has been steadily declining albeit at a slower rate than many Fed officials hoped for but with other economic data showing a declining US economy, markets have ‘dovishly’ repriced expectations. This makes today’s CPI critical for short-term guidance especially after last week’s Non-Farm Payroll (NFP) beat. I expect Fed Chair Jerome Powell to pushback against rate cuts tomorrow to allow for more incoming data. Stronger base and precious metals prices have also contributed to ZAR upside from a commodity export point of view. TECHNICAL ANALYSIS USD/ZAR DAILY CHART Chart prepared by Warren Venketas, TradingView The daily USD/ZAR chart continues to develop within the rising wedge chart pattern (dashed black lines) as the pair trades in and around the 19.0000 psychological handle. Traditionally a known as a bearish continuation formation but is highly dependent on US CPI, SA CPI and the Fed. The pattern will be negated should we see a confirmation close above wedge resistance while rand strength could be catalyzed by a US CPI miss thus possibly opening up the 18.5000 support level. Resistance levels: 19.3000 19.0000 Wedge resistance Support levels: 18.7759/50-day MA (yellow)/Wedge support 200-day MA (blue) 18.5000 https://www.dailyfx.com/news/forex-zar-price-update-rand-subject-to-us-cpi-wv-20231212.html

2023-12-12 12:00

Article by IG Senior Market Analyst Axel Rudolph Dow Jones, Nasdaq 100, Nikkei 225 - Analysis and Charts Dow hits fresh post-January 2022 high The index continues to demonstrate strong momentum, pushing to its highest level since early 2022, even as the latest US CPI print and Fed meeting loom large in the week’s calendar. The next step would be a test of 36,570, and then on to the record high at 36,954. So far downside momentum has been lacking, though a short-term pullback towards the summer highs at 35,690 would leave the overall move higher intact. Dow Jones Daily Chart Nasdaq 100 pushes through recent resistance Monday witnessed the index breaking out of the consolidation that dominated for most of November.The price now sits at its highest level since early 2022, and now the 16,630 and 16,769 highs come into view. Recent weakness has been halted around 15,760, so a move below this would open the way to the August highs at 15,570. After such a strong move a pullback would not be surprising, but for the moment the buyers remain in control. Nasdaq 100 Daily Chart A Large Part of Trading is Confidence - Confidence That You are Doing the Right Thing Nikkei 225 struggles to maintain recovery A strong recovery took place here from last week’s lows, as the yen weakened again on dovish commentary from the Bank of Japan, but the index stumbled on Tuesday, giving back gains. A higher low appears to have been established, and now the November highs at 33,800 come into view, followed up by the May highs at 34,000 if the index can recoup its losses. If sellers can drive the price back below 32,400 then a more bearish view would emerge, and could see a challenge of last week’s lows around 32,200, and then down to the 200-day SMA. Nikkei 225 Daily Price https://www.dailyfx.com/news/dow-and-nasdaq-100-make-headway-but-nikkei-225-stumbles-20231212.html

2023-12-12 11:01

EUR/USD Forecast - Prices, Charts, and Analysis German economic sentiment at its highest level since March. EUR/USD tests 1.0800, US CPI released later in today’s session. Most Read: Euro Price Forecast: Colossal Data Filled Week for EUR/USD The latest ZEW report painted a slightly better picture for the German and Euro Area economy with economic sentiment picking up to a multi-month high. Both readings beat market forecasts. German current conditions improved slightly from November but remain close to a historically low level compared to readings over the past five years. German ZEW Current Conditions The latest US inflation report will be released this afternoon with the core reading (y/y) expected to remain unchanged at 4%, while the annual headline reading is expected to tick 0.1% lower to 3.1%. While this report can move markets sharply, any move today will be tempered ahead of Wednesday’s FOMC meeting and Thursday’s ECB policy decision. Both central banks are fully expected to leave all policy levers untouched but the post-release press conferences may give the market more insight into the conditions needed for both central banks to start cutting interest rates. EUR/USD is currently trading on either side of 1.0800 and will likely remain that way ahead of the upcoming economic events. The move to the 1.0800 level is due to a combination of Euro strength and US dollar weakness, although both can change quickly in thin market conditions. Support for the pair starts at 1.0724 (last Friday’s multi-week low) ahead of 1.0716 (50-day sma). Resistance is seen at 1.0824 (200-day sma) ahead of the 23.6% Fibonacci retracement level at 1.0866. EUR/USD Daily Chart Chart Using TradingView IG Retail trader data shows 56.90% of traders are net-long with the ratio of traders long to short at 1.32 to 1.The number of traders net-long is 2.78% higher than yesterday and 14.25% higher than last week, while the number of traders net-short is 4.72% higher than yesterday and 13.39% lower 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-update-eur-usd-testing-1-0800-zew-sentiment-better-than-expected-20231212.html

2023-12-12 09:37

USD/JPY News and Analysis Busy week ahead of anticipated year end slump BoJ chatter creates confusion as markets seesaw ahead of US CPI BoJ aware not to surprise the market, communication is key The analysis in this article makes use of chart patterns and key support and resistance levels. For more information visit our comprehensive education library Busy Week Ahead of Anticipated Year End Slump This week is a massive one as 3 major central banks are due to provide updates on monetary policy and some are due to release economic forecasts (Fed, ECB). Today, US CPI is a major catalyst that can influence market direction. If US CPI comes in lower than expected, the recent USD/JPY sell-off is likely to continue. The Fed will then provide an update on its views regarding inflation, growth, the Fed funds rate and unemployment. It is anticipated that the Fed will once again look to avoid dovish language as inflation is yet to meet the 2% target but has made solid progress this year. The Bank of Japan (BoJ) will only meet next week Tuesday and markets will definitely turn their attention to any further mentions of what a policy pivot may look like. This week’s data could determine the direction of travel for FX markets heading into the end of the year where trading typically slows down during the Christmas period. BoJ Chatter Creates Confusion as Markets Seesaw Ahead of US CPI USD/JPY dropped on Thursday last week after comments from senior BoJ officials led markets to believe that a decision on walking away from negative interest rates was likely to be decided sooner than expected. In the days thereafter, the BoJ has commented that the committee see little need to end negative rates in December, causing traders to pull back bets on a stronger yen. 146.50 is the current level of resistance with 145 immediate support. Thereafter, the 200 SMA and 141.50 levels could come into play. With plenty of high importance event risk this week, we may be about to embark on a period of choppy and volatile moves across the FX space, necessitating a focus on risk management. USD/JPY Daily Chart Source: TradingView, prepared by Richard Snow The bond market has contributed to some of the recent USD/JPY volatility, as a sharp spike higher has turned lower over the last three days. Stepping away from negative interest rates has the potential for massive ramifications throughout global markets, necessitating further communication from officials. The challenge with this sensible approach is around navigating the temptation to mention specifics or timelines as to when this eventual policy shift will take place. This week however, the focus is on the US ahead of CPI and the FOMC meeting. US retail sales should also be noted as far as it refers to the health of the US consumer – something that has buoyed the local economy. Japanese Government Bond (10 year) Source: TradingView, prepared by Richard Snow https://www.dailyfx.com/news/boj-chatter-sends-mixed-messages-usd-jpy-softer-ahead-of-us-cpi-20231212.html