FundYourFX Weekly Newsletter – Dec 4 – 8, 2023

Welcome to the Weekly Market Update!

We are here to provide you with the pivotal financial happenings and insights. Our focus is on the primary stories of the week, alongside a deep dive into market dynamics, economic milestones, events to monitor, and technical forecasts. Here’s the essential roundup to keep you savvy and ready for strategic financial moves.

Top Stories of the Week

1. Fed Signals Potential Rate Cuts: Federal Reserve officials, including the notably hawkish Governor Christopher Waller, indicated a possible shift in policy, suggesting rate cuts if inflation continues to decrease.
2. British Pound Hits Three-Month Peak: The GBP/USD exchange rate climbed to 1.27, driven by Bank of England Governor Andrew Bailey’s hawkish stance and dovish signals from the Fed.
3. Gold Reaches Seven-Month High: Anticipations of the Federal Reserve cutting interest rates by March next year, alongside falling yields and a weakening USD, propelled gold prices towards $2050.
4. Microsoft Gains Seat at OpenAI’s Table: Microsoft acquired a non-voting board seat at OpenAI, following recent upheavals involving CEO Sam Altman.

Market Analysis

• Oil Prices Decline Amid OPEC’s Underwhelming Cuts: WTI crude dropped to $75.50 per barrel, a 2.85% decrease, as OPEC’s production cuts fell short of the expected 1 million barrels per day. The uncertainty in member countries’ individual cut announcements, especially excluding Saudi Arabia and Russia, has impacted market sentiment. The cuts are set to start in January. This decline comes after a brief approach to $80, with the next support level anticipated around $73. The strengthening of the US dollar also played a role in the oil price drop.

Economic Highlights

• Asia’s Manufacturing Hit by Global Instability: In November, Asia’s manufacturing, especially in export-centric economies, experienced a slowdown due to economic uncertainties in Europe and the US. China’s manufacturing sector showed conflicting signals: the Caixin Manufacturing PMI increased to 50.7 from October’s 49.5, contrasting with official data suggesting a contraction. This discrepancy highlights the complexity of Asia’s economic situation in the face of global shifts. Concurrently, Japan’s Nikkei index traded 0.40% lower, with the likelihood of breaking below the 33,400 mark rising.

Upcoming Events to Watch

• US Non-Farm Payroll Report: October’s nonfarm payroll showed a rise of 150,000 jobs, below the 12-month average gain of 258,000 and under the expected 180,000. Unemployment edged up to 3.9% following the Fed’s aggressive rate hikes. Market watchers will keenly observe if this weaker jobs trend persists, potentially hastening a Fed rate cut.
• RBA Interest Rate Decision (Dec 4): The Reserve Bank of Australia’s rate decision is due, with rates currently at a 13-year high of 4.35%. With Australia’s inflation rate dropping to 4.9% in October and the market anticipating a mere 2% chance of a hike, expectations lean towards rate stabilization. This meeting marks the year’s last, resuming in February.
• BoC Rate Announcement: The Bank of Canada’s upcoming decision follows Governor Tiff Macklem’s suggestion that peak interest rates have been reached. With inflation targeting 2%, the BoC is not expected to alter its policy, though it may remain open to future hikes if necessary.
• Eurozone Retail Sales Insight: September’s retail sales in the Eurozone dipped by 0.2%, aligning with forecasts. With the economy contracting slightly and PMIs in the negative zone, yet with falling inflation and rising consumer confidence, there’s cautious optimism for an improving consumer sector. Stronger sales could hint at the Eurozone’s economic downturn reaching its nadir.
• Broadcom Earnings Announcement (Dec 7): Broadcom is set to report earnings, with Wall Street predicting an EPS of $10.96 on $9.28 billion revenue. Following its $69 billion acquisition of VMWare, Broadcom’s share price has surged nearly 80% this year, primarily due to AI advancements, despite mixed demand in personal computing and smartphones. Analysts anticipate a more favorable Q4 outlook, with guidance and AI investment plans being key focal points.

Technical Analysis

We have analyzed the most popular trading pairs and assets, including EUR/USD, GBP/USD, Gold, and US500. Our aim is to provide you with an insightful analysis of their trends and support/resistance levels, which will help you make informed decisions.

EUR/USD

The EUR/USD currency pair is currently showing a minor retracement following its recent upward trend. Despite this, it still trades above the 50-day Simple Moving Average (SMA), hinting at the persistence of the uptrend. The Relative Strength Index (RSI), however, has dipped from its previously higher values, indicating a decrease in bullish momentum. There is a likelihood that the price might retest the resistance zone before potentially declining. Should the price surpass the resistance, it would be prudent to wait for it to establish this zone as new support, and then consider a long position upon observing a bullish signal and a confirming bar.

GBP/USD

The GBP/USD pair is exhibiting resilience, consistently staying above the 50-day SMA. The RSI, having dropped slightly, now hovers near the mid-range, potentially indicating a decrease in buying activity. The pair is nearing a key resistance at 1.256. Surpassing this level could be a signal of sustained bullish momentum.

XAU/USD

Gold has experienced a significant uptick following the weakening of the USD. This aligns with the Federal Reserve’s intention to lower interest rates come December. Notably, the price surpassed the robust resistance level at 2045, a threshold that previously led to rejections. This time, however, it broke through with a decisive candle and maintained its position above this level. If the upward trajectory of gold persists, it’s projected to reach around 2187 or 2022, after which a correction is likely before the continuation of the upward trend.

XUS500

The S&P 500 index continues to demonstrate bullish strength, trading significantly above its 50-day SMA. There’s a slight decline in the RSI, moving it out of the overbought territory, which might mitigate the chances of an imminent correction. The index faces resistance at 4654, with robust support found at 4362. These levels are crucial for predicting the index’s future price movements.

Thank you for reading! Wishing you successful trades ahead!

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