Gold shows continued recovery trend

Commodity

Summary:

On December 10, 2024, the price of gold (XAU/USD) was trading around $2,655/oz, with a recovery trend after a recent correction. The move was supported by concerns about global economic risks and expectations of dovish monetary policy from the US Federal Reserve (Fed)....

BUY XAUUSD

Close Time

CLOSED

2657.00

Entry Price

2665.00

2640.00

2627.71 +11.00 +0.42%

80.0

Pips

Profit

2640.00

2665.02

Exit Price

2657.00

Entry Price

2665.00

Gold prices continue to receive support from a stable interest rate environment as the Fed just signaled to keep interest rates unchanged at its policy meeting last week. With US economic data showing the producer price index (PPI) in November falling 0.1%, inflationary pressures appear to have eased, making the possibility of further interest rate hikes less likely.

In addition, the market is reflecting the impact of geopolitical tensions in the Middle East, increasing the demand for safe haven gold. Gold ETFs also recorded a sharp increase in inflows, reaching 12 tons last week, a sign that confidence in this safe asset is increasing.

Market psychology

Current market sentiment is bullish for gold as investors seek safe havens from economic turmoil. A report from the World Gold Council showed that physical gold demand from China and India rose 4% in November from the previous month, supported by the festive season and expectations of price stability.

However, demand from the US market has shown signs of slowing down as the USD maintains its strength. The DXY index is currently fluctuating at 104.3, putting some pressure on gold prices.

Technical analysis

On the H1 chart, gold price has broken above the 20-period moving average, creating a solid bullish base. The Bollinger Bands are expanding, indicating increased volatility. The current price is above a strong support zone at $2645, with the nearest resistance at $2665.

The CCI (14) indicator has just entered the overbought zone (104.26), suggesting a slight correction in the short term. However, the bullish momentum is still maintained as other technical signals such as the uptrend on the MACD are still clear.

Trading strategy

Entry: $2655

Take Profit: $2665

Stop Loss: $2640

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

The EUR/AUD pair is trading around 1.6350, with a strong bearish bias amid strength in the Australian Dollar and pressure on the Euro...

SELL EURAUD

EXP

EXPIRED

1.63500

Entry Price

1.63000

1.64000

1.67127 +0.00661 +0.40%

Pips

EXPIRED

1.63000

1.64555

Exit Price

1.63500

Entry Price

1.64000

The Australian dollar continued to receive support from a rebound in iron ore prices, which rose 2.3% last week to a three-month high of $130/tonne. Iron ore is Australia’s main export, so the rise in prices has driven investment flows back into the AUD. In addition, the Australian consumer confidence index rose to 105.8 in November, suggesting that the Australian economy is still holding on to its recovery momentum.

On the other hand, the euro was pressured by German industrial production data for November, which fell 1.7% compared to the forecast of a 0.8% decline. This reflects the difficulties in the eurozone's leading industry, which has led to a gloomy economic outlook for the region as a whole. The ECB has also recently sent out a cautious signal, highlighting the risk of a recession and the possibility of maintaining a limited tightening policy.

Market psychology

Market sentiment has shifted towards the Australian dollar as capital flows into commodity-related assets. At the same time, a weak economic outlook in Europe has prompted investors to reduce their positions in the euro, shifting to safer or higher-yielding assets.

Recent trading data shows that euro sell-offs increased by 12% over the past week, while Australian dollar buy-outs increased by 15%. This reflects a significant shift in investment strategy as large funds bet on a strong AUD recovery.

Technical analysis

On the M15 chart, EUR/AUD broke the important support zone at 1.6400 and is currently trading around 1.6350. The Bollinger Bands are widening, signaling a strong bearish trend. The price is now below the 20-period moving average, reinforcing the bearish momentum.

The Stochastic (5,3,3) indicator has entered deep into the oversold zone, with the %K value at 5.39. While this usually signals a potential short-term upside correction, the bearish trend remains dominant as the market has not shown any clear reversal signals.

Trading strategy

Entry: 1.6350

Take Profit: 1.6300

Stop Loss: 1.6400

Given the current fundamentals and technicals, EUR/AUD is facing strong downside pressure. Investors should pay attention to economic reports from the ECB and Australian export data this week for further developments.

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

The GBP/JPY pair is trading around 192.620, continuing its strong uptrend on the back of sterling strength and Japanese yen weakness. The rally is supported by positive UK economic data and the prospect of easing by the Bank of Japan (BoJ)...

BUY GBPJPY

Close Time

CLOSED

192.600

Entry Price

192.900

192.400

197.502 +0.692 +0.35%

30.0

Pips

Profit

192.400

192.900

Exit Price

192.600

Entry Price

192.900

The British pound gained significantly after the UK GDP report for November 2024, recording a growth of 0.4% compared to the expectation of 0.3%. In addition, the services PMI index reached 52.7 in November, higher than the forecast of 51.8, reflecting the strong recovery of the UK economy. These signals led the market to expect that the Bank of England (BoE) could pause its tightening policy in the first quarter of 2025, but still maintain a tough stance in the short term.

In Japan, the yen continued to be under pressure as the BoJ made no move to change its negative interest rate policy at its recent meeting. The Japanese bond market recorded a drop in the 10-year yield to 0.84%, widening the yield gap with the UK, where the 10-year bond yield remained around 4.1%.

Market psychology

Sentiment is tilted towards the pound as investors look to the UK economy for strength and capital flows into higher-yielding assets. At the same time, capital continues to leave the yen due to its lack of yield appeal and the prospect of unchanged monetary policy from the BoJ.

Large funds have adjusted their positions on GBP/JPY, with inflows rising 18% over the past week, reflecting confidence in the pair’s upward momentum. The Fear and Greed Index rose slightly to 64, indicating that investors remain bullish on the forex market.

Technical analysis

On the M15 chart, GBP/JPY broke the important resistance at 192.300 and is currently hovering near 192.620. The Bollinger Bands are expanding, signaling increased volatility. The price is also above the 20-period moving average, reinforcing the bullish momentum.

The Stochastic (5,3,3) indicator shows an overbought signal with a %K value of 100. However, this does not rule out the possibility of further upside as the market momentum is strong. The nearest support zone is at 192.400, while the next resistance is at 192.900.

Trading Recommendations

Entry: 192.600

Take Profit: 192.900

Stop Loss: 192.400

Risk/Reward Ratio:

2:1

Conclude

GBP/JPY is showing outstanding strength thanks to a combination of fundamental and technical factors. With positive signals from the UK economic data and a gloomy outlook for the Yen, the pair is expected to continue its uptrend in the short term. Investors should closely monitor the statements from the BoE and BoJ this week for further guidance.

Risk Warnings and Disclaimers

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Adam

Forex

Summary:

On December 9, 2024, USD/JPY is trading around 150.731, continuing its strong rally after breaking through the resistance level of 150.600. Market sentiment is leaning towards placing confidence in the USD, supported by positive US economic data and expectations of interest rates from the Fed....

BUY USDJPY

Close Time

CLOSED

150.750

Entry Price

151.000

150.500

157.922 +0.833 +0.53%

25.0

Pips

Profit

150.500

151.000

Exit Price

150.750

Entry Price

151.000

The US dollar continued to show strength as the market digested the US Non-Farm Payrolls report released on December 8, which beat expectations by adding 223,000 jobs compared to the forecast of 200,000. The unemployment rate remained at 3.7%, indicating that the US labor market remains strong. This reinforced expectations that the Fed will keep interest rates high for longer to control inflation.

In Japan, the Bank of Japan has maintained its stance of maintaining negative interest rates and yield curve control (YCC) policy. This has widened the interest rate gap between the US and Japan, putting downward pressure on the Yen. In addition, the report of Japan's GDP growth in the third quarter was only 0.6%, lower than the expectation of 0.8%, further reducing the attractiveness of the Yen.

Market psychology

The current market sentiment is tilted towards low-risk assets, with money flowing into the US dollar due to the lure of higher interest rates. The DXY (Dollar Index) rose to 105.8, reflecting the greenback’s strength against other major currencies. Meanwhile, the VIX index remained steady at 18.5, indicating investor confidence in the outlook for US financial markets.

On the other hand, investors are concerned about the recovery of the Japanese economy. The yield on 10-year Japanese government bonds fell slightly to 0.88%, reflecting the lack of attractiveness of Japanese assets.

Technical analysis

On the M30 chart, USD/JPY broke through the important resistance zone at 150.600 and is now approaching the next resistance level at 150.900. The Bollinger Bands are widening, indicating increased volatility and a possible continuation of the uptrend. The price is now above the 20-period moving average, reinforcing the bullish momentum.

The Stochastic (5,3,3) indicator is in the overbought zone with a %K value of 91.91, signaling a possible slight correction before continuing to rise. The nearest support level is located at 150.500, while the next important resistance is located at 151.000.

Trading strategy

Overall, USD/JPY continues to maintain a strong uptrend thanks to support from positive US economic data and the weakness of the Japanese Yen. Traders should consider buying strategies at support zones,

Entry: 150.750

Take Profit: 151.000

Stop Loss: 150.500

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

The Pound (GBP) has gained against the US Dollar as markets bet on a 25-basis-point rate cut by the Federal Reserve (Fed) in December.

BUY GBPUSD

Close Time

CLOSED

1.27800

Entry Price

1.30000

1.26500

1.25050 -0.00184 -0.15%

130.0

Pips

Loss

1.26500

1.26493

Exit Price

1.27800

Entry Price

1.30000

The Pound Sterling (GBP) is seeing notable strength against the US Dollar, buoyed by increasing market speculation that the Federal Reserve will enact a 25-basis-point interest rate cut at its December meeting. Investors are positioning for this shift, driven by the Fed’s growing concern over the risks to the economy as inflationary pressures moderate. However, despite the global trend toward easing, the Bank of England (BoE) remains cautious, indicating that the path to monetary easing in the UK could be more gradual due to persisting price pressures.

The GBP is broadly firm against its major counterparts, save for some regional currencies in the Asia-Pacific. The market’s focus this week has been on the Federal Reserve’s interest rate trajectory. After a series of aggressive rate hikes aimed at controlling inflation, investors are now anticipating a potential pause in the tightening cycle. According to the latest data, there is increasing consensus that the Fed will cut its benchmark rate by 25 basis points at its upcoming meeting on December 18.

This shift in expectations for a rate cut has given the US Dollar some headwinds, with the Pound benefiting from the more dovish outlook for the Fed. The move has been driven by data indicating that inflation in the US is showing signs of cooling, reducing the urgency for further tightening. However, while the US faces these evolving dynamics, the UK’s economic landscape presents its own set of challenges, keeping the BoE in a more reserved position.

On the domestic front, the Bank of England has kept its tone somewhat dovish but cautious. BoE Governor Andrew Bailey stated that the central bank still has “some work to do” to bring inflation back down to its target of 2%. While he remains optimistic that disinflation is taking hold, he emphasized the need for continued vigilance. The BoE’s cautious stance stems from the elevated inflationary environment, which has remained stubbornly above target despite earlier rate hikes.

Adding to the complexity, external BoE committee member Megan Greene echoed the governor’s sentiment, suggesting that the inflation target could be reached by the end of the BoE’s forecast period of three years. This is a longer-term view that points to a more gradual return to the 2% target, meaning that any aggressive policy changes are unlikely in the near term.

On Monday, market participants will turn their attention to a key speech by BoE Deputy Governor Dave Ramsden at the Official Monetary and Financial Institutions Forum. Ramsden has been one of the more dovish policymakers, and his remarks could provide further clarity on the BoE’s next moves. While Ramsden has generally leaned towards a cautious approach to rate cuts, his comments will be crucial in determining whether the BoE will consider easing sooner than currently anticipated.

The outlook for the UK economy has also been clouded by weak labor market data. A recent survey from the Recruitment and Employment Confederation (REC) and KPMG revealed that labor demand has fallen sharply following the implementation of the Labour government’s first budget. In this budget, employer National Insurance Contributions (NICs) were raised to 15%, a policy move that has had an immediate impact on the hiring landscape.

The REC’s index of demand for staff plummeted to 43.9, the lowest level since August 2020, a sharp drop from 46.1 in the previous month. This suggests a significant slowdown in hiring activity, as businesses respond to higher labor costs and an uncertain economic environment. The survey indicates that companies may be holding back on expanding their workforce due to rising overheads, further complicating the BoE’s task of managing inflation without stifling growth.

Technical Analysis

Technically, GBP/USD continues its bullish momentum after recently testing the 1.2735 level. The pair has shown resilience and is poised to continue its upward trajectory, with the next key target at 1.2865. The 50-period Exponential Moving Average (EMA50) continues to provide strong support, reinforcing the expectation that the bullish trend will persist in the near term.

However, a break below the 1.2735 support level would signal a potential reversal and could invalidate the current bullish outlook. For the time being, the pair is expected to trade within a range between 1.2670 as support and 1.2820 as resistance. As long as the price remains above 1.2735, the bullish outlook remains intact, and further gains toward 1.2865 are likely.

TRADE RECOMMENDATION

BUY GBPUSD

ENTRY PRICE: 1.2780

STOP LOSS: 1.2650

TAKE PROFIT: 1.3000

Risk Warnings and Disclaimers

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Warren Takunda

Commodity

Summary:

Oil prices dropped sharply in U.S. trading on Friday, marking a third consecutive day of losses.

SELL WTI

Close Time

CLOSED

67.700

Entry Price

64.500

69.500

70.444 +0.655 +0.94%

180.0

Pips

Loss

64.500

69.540

Exit Price

67.700

Entry Price

69.500

Global oil prices continued their downward trajectory on Friday, hitting fresh two-week lows as market participants digested concerns about a potential supply glut in 2025, despite efforts by OPEC+ to extend production cuts. The pessimism surrounding the future oil supply overshadowed a positive data point in the form of a significant drop in U.S. crude inventories, which had initially signaled stronger domestic demand.

U.S. West Texas Intermediate (WTI) crude futures plummeted by 1.45% to settle at $67.41 per barrel, the lowest closing price since November 18, 2023. The session-high reached $68.46, but it wasn’t enough to offset the prevailing bearish sentiment. Meanwhile, Brent crude futures, the global benchmark, also experienced a sharp decline, falling by 1.25% to $71.25 per barrel, the lowest since November 18. Brent’s session-high was $72.21, but similar to WTI, it couldn't sustain gains as traders focused on growing supply concerns.

This marks the third consecutive day of losses for both benchmarks, continuing a trend that began earlier in the week. On Thursday, WTI and Brent had also faced declines, losing 0.4% and 0.45%, respectively. The market is struggling under the weight of worries that the oil supply will outpace demand, particularly in 2025, even as OPEC+ has attempted to balance the market by extending its production cuts.

Bank of America analysts weighed in on the issue, predicting that the supply glut would push Brent crude down to $65 per barrel by 2025. They also projected that global demand for oil would increase by a modest one million barrels per day (bpd) next year, which may not be enough to absorb the surging supply. HSBC analysts echoed these sentiments, though with a slightly smaller forecast for the supply surplus, estimating it to be 0.2 million bpd, down from previous expectations of 0.5 million bpd.

Despite these grim forecasts, OPEC+ remains committed to supporting prices. In a bid to boost market conditions, the cartel announced on Wednesday that it would extend its existing production cuts of 2 million bpd for another year, now lasting through 2026 instead of 2025. Additionally, eight OPEC+ members, including Saudi Arabia, Russia, and the UAE, agreed to extend voluntary cuts of 2.2 million bpd through March 2025. This brings the total cuts in play to a substantial 5.9 million bpd, or approximately 5.7% of global oil demand.

Yet, the market appears unconvinced. Despite these concerted efforts by OPEC+, concerns about an oversupplied market in the near future are taking precedence. The extension of the cuts, while aiming to curb supply, has not been able to dispel market skepticism about the sustainability of the global oil market.

In the U.S., the Energy Information Administration (EIA) reported a significant drop in crude inventories for the week ending September 29, with stocks falling by 5.1 million barrels. This was a much larger decrease than the 1.6 million-barrel drop that analysts had forecasted, providing a glimmer of hope for domestic oil demand. The total U.S. crude stocks now stand at 423.4 million barrels, the lowest level since mid-October 2023. However, despite this positive data point, oil prices continued their downward spiral, as traders focused on global supply dynamics rather than isolated domestic trends.

Meanwhile, U.S. crude production remained steady at a record-high 13.5 million bpd, according to the EIA, suggesting that American production levels are likely to continue at high rates for the foreseeable future, potentially further contributing to the global supply glut.

Technical Analysis

From a technical analysis perspective, the outlook remains bearish. Crude oil prices have corrected to around $67.70 per barrel after the declines witnessed in earlier sessions. If prices fail to break above the $68.64 resistance level, the market is likely to head towards the next support level at $65.50 per barrel.

The short-term forecast suggests that bearish pressure will persist, fueled by the negative momentum created by the 50-day Exponential Moving Average (EMA). A breach of the $68.64 resistance level could, however, signal the beginning of a price recovery on an intraday basis. For today, analysts expect the trading range to be between $65.80 support and $68.80 resistance.

TRADE RECOMMENDATION

SELL WTI

ENTRY PRICE: 67.70

STOP LOSS: 69.50

TAKE PROFIT: 64.50

Risk Warnings and Disclaimers

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Warren Takunda

Economic

Summary:

USD/CAD strengthens to near 1.4170 amid expectations of another significant rate cut by the Bank of Canada, coupled with a stronger-than-expected US labor report.

BUY USDCAD

Close Time

CLOSED

1.41300

Entry Price

1.43000

1.40000

1.44016 +0.00542 +0.38%

30.6

Pips

Profit

1.40000

1.41606

Exit Price

1.41300

Entry Price

1.43000

The USD/CAD exchange rate saw a notable surge on Monday, climbing toward the 1.4170 mark during the early European trading session. This upward movement marks a continuation of the recent bullish trend, fueled by investor expectations of another aggressive rate cut by the Bank of Canada (BoC), which is set to announce its decision on Wednesday.

The Canadian Dollar (CAD) has been under significant pressure recently, weakening to levels not seen in nearly five years. As the BoC prepares to lower its key interest rate by another 50 basis points (bps) this week, traders are pricing in a prolonged period of monetary easing. This follows the central bank’s decision to cut rates by the same amount in October, taking the benchmark rate to 3.75%. With another 50 bps reduction likely, the BoC’s rate will stand at 3.25% by the end of this week, putting further downward pressure on the Canadian Dollar.

“The Bank of Canada’s dovish outlook is clearly weighing heavily on the CAD. Technically, there’s little to suggest the currency will recover in the short term,” remarked Shaun Osborne, Scotiabank’s Chief Foreign Exchange Strategist. He further added that the potential for additional rate cuts, combined with the broader economic outlook, suggests a continued bearish trend for the CAD in the coming weeks.

The Bank of Canada’s dovish stance is not without reason. The Canadian economy, which has faced several challenges over the past year, has struggled with sluggish growth and inflationary pressures, which prompted the central bank to adopt a more accommodative monetary policy. The BoC’s ability to support the economy through rate cuts is now being called into question, particularly as inflation remains persistently above the central bank’s target. However, analysts expect the BoC to focus on stimulating growth, even if it means tolerating slightly higher inflation in the near term.

Compounding the bearish sentiment surrounding the Canadian Dollar are fears of potential trade tensions under the incoming US administration. Former President Donald Trump’s rhetoric during his election campaign about imposing tariffs on goods from Canada, Mexico, and China continues to weigh on market sentiment. While President Trump’s stance on trade remains fluid, concerns over tariffs could further exacerbate the pressure on the CAD if implemented, dampening investor confidence in the currency.

On the economic front, a strong US Nonfarm Payrolls (NFP) report released last Friday has provided further tailwinds for the USD. The US economy added 227,000 jobs in November, well above the market consensus of 200,000. The report suggested that while the labor market is slowing, it is not experiencing a sharp contraction that would alter the Federal Reserve’s course. The slight uptick in the unemployment rate to 4.2% from 4.1% in October was largely seen as a reflection of a larger workforce participation rate rather than a sign of economic weakness.

The strong NFP numbers reinforced the market’s belief that the Federal Reserve may be able to continue its rate-tightening cycle, which contrasts sharply with the BoC’s dovish stance. Despite the recent dip in US inflation data, investors are increasingly confident that the Fed will likely stay on track with its rate hikes in 2024. This divergence in monetary policy expectations has widened the interest rate differential between the USD and CAD, further fueling the recent rise in USD/CAD.

Looking ahead, traders will be keenly focused on the release of the US Consumer Price Index (CPI) and Producer Price Index (PPI) reports later this week. These inflation figures will provide crucial insights into the trajectory of US price pressures, and more importantly, will likely influence the Fed’s decision-making process regarding future rate hikes. If inflation remains elevated, it could prompt the Fed to accelerate its tightening, providing further support for the US Dollar, and consequently, putting additional pressure on the CAD.

Technical Analysis

From a technical perspective, USD/CAD has been on a strong upward trajectory over the past several sessions. The pair has successfully broken above key resistance levels and is now testing the 1.4170 zone, approaching a target of 1.4178. This confirms the continuation of the bullish trend, with expectations of further gains, potentially reaching the 1.4300 area in the near future.

However, momentum indicators such as Stochastic are showing signs of potential overbought conditions, which may cause a temporary slowdown in the bullish momentum. A break below 1.4140 could lead to a pullback, testing the key support at 1.4000 before any further upward movement.

The expected trading range for USD/CAD in the short term is between 1.4100 on the downside and 1.4230 on the upside, with the overall trend remaining bullish as long as support levels hold.

TRADE RECOMMENDATION

BUY USDCAD

ENTRY PRICE: 1.4130

STOP LOSS: 1.4000

TAKE PROFIT: 1.4300

Risk Warnings and Disclaimers

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Gold shows continued recovery trend

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EUR/AUD shows continued bearish momentum

Market psychology

Technical analysis

Trading strategy

GBP/JPY shows strong bullish signals from the British Pound

Market psychology

Technical analysis

Trading Recommendations

Conclude

USD/JPY Shows Strong Upside Momentum With Supporting Data

Market psychology

Technical analysis

Trading strategy

Pound Sterling Gains Against US Dollar Amid Anticipated Fed Rate Cuts, BoE's Cautious Stance

Oil Prices Slide Amid Supply Glut Fears, OPEC+ Cuts Fail to Halt Decline

USD/CAD Strengthens as Canadian Dollar Faces Pressure Ahead of BoC Rate Decision

Risk Disclosure