ATFX Market Outlook 19th December 2024

ATFX Market Outlook 19th December 2024

USD and Bond Yields Strength: Fed Confronts Fewer Rate Cuts Amid Ongoing Inflation Challenges.

Opinion Today:

The U.S. central bank lowered interest rates on Wednesday, as expected. Federal Reserve Chair Jerome Powell indicated that further cuts would depend on progress in reducing high inflation. His remarks suggest policymakers are considering potential economic changes under the Trump administration. As a result of Powell's comments, bond yields have risen, and investors have revised their expectations for future borrowing cost reductions.

U.S. stocks fell sharply on Wednesday after Powell’s speech. The Dow lost 2.59%, the S&P 500 fell 2.95%, and the Nasdaq declined 3.56%. This marked the Dow's longest one-day losing streak since 1974. The dollar rose to a new high since November 2022, up 1.08% to 108.08. The euro dropped 1.17% to 1.0351, the dollar gained 0.78% against the yen, and the pound fell 0.98% to 1.2573.

Gold prices fell over 2% to a one-month low after the Fed rates cut and indicated a slower pace for future cuts, boosting the dollar. Spot gold closed at $2,587.63 an ounce, the lowest since November 18. Despite a drop in U.S. crude oil inventories, prices still closed lower due to the Fed's comments.

The Bank of Japan is expected to keep its policy unchanged today but may signal a potential interest rate hike in January. Investors await the policy outlook to guide the Japanese Yen. The Bank of England will announce its decision tonight, likely maintaining current rates after two reductions from a 16-year high. The upcoming policy direction will be key in influencing sterling's trends.

Key Data:

11:00 BoJ Interest Rate Decision *** 

14:30 BoJ Press Conference *** 

20:00 BoE Interest Rate Decision *** 

21:30 US GDP & Core PCE Prices Final Q3 *** 

21:30 US Initial Jobless Claims *** 

23:00 US Existing Home Sales NOV **

Tomorrow

03:30 NYMEX Crude Oil January Futures Expires ***

07:30 JP CPI NOV *** 

09:00 CN 1-Year and 5-Year Loan Prime Rates ** 

15:00 GB Retail Sales MoM NOV *** 

21:30 CA Core Retail Sales OCT *** 

21:30 US Core PCE Price Index NOV *** 

23:00 US Michigan Consumer Sentiment Prel DEC *** 

EUR/USD

1.0410/1.0446 Resistance1.0331/1.0297 Support

The euro fell over 1% against the US dollar yesterday, reaching its lowest point since November 22, near the support level of 1.0333. While a short-term rebound may be possible after the sharp decline, watching the 1.0410 resistance level is essential.

GBP/USD

1.2649/1.2688 Resistance1.2533/1.2485 Support

Sterling dropped over 1% against the US dollar yesterday, its worst performance since October 3. It fell below the key moving average and hit a three-week low. With this average acting as resistance, the focus is on whether the pair will approach November's low range. The Bank of England has halted interest rate cuts today, and any hints of gradual easing could help the sterling recover some ground.

USD/JPY

155.28/155.67 Resistance154.41/154.02 Support

The USD/JPY pair saw its biggest gain since early November yesterday, reaching a three-week high. It may face resistance at the 155 barrier. The Bank of Japan is expected to keep interest rates unchanged today. Still, market attention will focus on potential adjustments to its interest rate plan, with expectations of a possible hike in January.

USD/CAD

1.4480/1.4503 Resistance1.4402/1.4379 Support

The U.S. dollar rallied for five days against the Canadian dollar, rising nearly 1% yesterday to surpass 1.4400, its highest since April 2020. If it breaks above 1.4500, it could enter the previous high range. Monitor potential high consolidation or partial adjustment in the pair.

U.S Crude Oil Futures (February)

70.00/70.29 Resistance69.06/68.77 Support

The decline in U.S. crude oil inventories reflects strong demand, but the Federal Reserve's indication of slowing interest rate cuts has reduced optimism. After being rejected at $70.76 yesterday, crude oil prices have fallen for three days and are currently trying to hold above the key support level of $69.

Spot Gold

2630/2643 Resistance2586/2569 SupportSpot Silver30.01/30.23 Resistance29.07/28.86 Support

After the Federal Reserve's decision, the strong dollar caused spot gold prices to drop significantly yesterday, falling over $50 to below $2,590—the most significant decline since November 25. Spot silver also hit a three-month low. While gold attempted to rebound to $2,600 this morning, the $2,630 mark could be a key resistance level.

US30

42564/42968 Resistance41661/41264 Support

The Fed rates were cut by 25 basis points as expected but signalled a cautious easing path for next year, disappointing some investors. As a result, the Dow futures continued their decline, hitting their lowest level since November 5. It remains uncertain if the price will drop below the 42,000 barrier. Today, investors will focus on the final value of US GDP.

NAS100

21439/21704 Resistance21011/20796 Support

The hawkish Federal Reserve negatively impacted the market, causing large tech stocks to drop significantly overnight. Tesla fell 8.28%, pushing the Nasdaq further from its record high. The intraday coefficient dropped below the key daily moving average and slightly under the 20-day moving average. If this trend continues, it could threaten the 21,000 barrier, although the trend line from late October may offer some support.

BTC (Bitcoin)

102979/105032 Resistance98002/96371 Support

Bitcoin and the crypto market dipped on Wednesday after the Federal Reserve cut interest rates by 25 basis points but revised its 2025 outlook, reducing potential cuts and raising inflation expectations. Bitcoin fell 5.4% to $100,314, and the market lost $200 million, with Ethereum and other altcoins also declining. If the market sentiment could continue till the European trading session, investors should consider the bear momentum continuous. 

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