Market Roundup
• Japan BSI Large Manufacturing Conditions (Q4) 6.3 ,1.8 forecast, 4.5 previous
• Japan BSI GDP External Demand (QoQ) (Q3) -0.2% ,-0.4% forecast, -0.1% previous
• Japan PPI (MoM) (Nov) 0.3%, 0.2% forecast, 0.3% previous
• Japan PPI (YoY) (Nov) 3.7%,3.4% forecast, 3.6% previous
Looking Ahead Economic Data (GMT)
•Portuguese CPI (YoY) (Nov) 2.5% forecast, 2.3% previous
•Portuguese CPI (MoM) (Nov) -0.2% forecast, 0.1% previous
•UK GBP 10-Year Treasury Gilt Auction 4.475% previous
Looking Ahead Events And Other Releases (GMT)
•No Events Ahead
Currency Forecast
EUR/USD: The euro slipped against the dollar on Wednesday ahead of the highly anticipated U.S. inflation report, which could provide insight into the pace of Federal Reserve interest rate cuts. Economists expect both headline and core consumer prices to have risen by 0.3% in November, up from previous gains of 0.2% and 0.3%, respectively. According to 90% of economists polled, the Fed is expected to cut rates by 25 basis points on December 18, with most predicting a pause in late January due to concerns over inflation risks. Investors are also focused on the European Central Bank's policy decision on Thursday, with markets anticipating at least a quarter-point rate cut. Immediate resistance can be seen at 1.0605(38.2%fib), an upside break can trigger rise towards 1.0637(30SMA).On the downside, immediate support is seen at 1.0458(23.6%fib), a break below could take the pair towards 1.0417(Lower BB).
GBP/USD: The British pound dipped on Wednesday as investors focused on the U.S. Consumer Price Index, which could provide clues about the pace of Federal Reserve interest rate cuts. The Bank of England is expected to keep interest rates on hold next week, moving more slowly in cutting borrowing costs compared to central banks in Europe and the U.S. The BoE remains vigilant about price pressures in Britain's jobs market, which have eased more clearly in other regions. Having only cut the Bank Rate twice from a 16-year peak, the BoE's cautious stance has helped make sterling the only currency among the Group of 10 leading economies that has not fallen against the U.S. dollar in 2024.Immediate resistance can be seen at 1.2866(Higher BB), an upside break can trigger rise towards 1.2789 (SMA 30).On the downside, immediate support is seen at 1.2629(38.2%fib), a break below could take the pair towards 1.2507(23.6%fib).
AUD/USD:The Australian dollar weakened on Wednesday as Reserve Bank of Australia's dovish stance continued to pressure the Australian dollar.On Tuesday, the Reserve Bank of Australia (RBA) decided to maintain interest rates at 4.35%, while moderating its previously hawkish stance by removing a reference to the necessity of keeping policy restrictive. With two labour market and retail sales reports, one quarterly CPI and two monthly CPI releases scheduled between now and its Feb 17-18 meeting, the RBA will be well placed to make an informed choice. Market pricing of a 25 basis-point rate cut in February has risen to 61% from about 54% before the RBA meeting, with the first cut now fully priced for April and two by May .Immediate resistance can be seen at 0.6392(Daily high), an upside break can trigger rise towards 0.6409(38.2%fib).On the downside, immediate support is seen at 0.6343(23.6%fib), a break below could take the pair towards 0.6326(Lower BB).
USD/JPY: The dollar weakened against the yen on Wednesday after data showed that Japanese wholesale inflation accelerated, bolstering the case for a Bank of Japan interest rate hike next week. Japan's corporate goods price index (CGPI), which tracks the prices companies charge each other for goods and services, rose 3.7% year-on-year last month, surpassing the market forecast of a 3.4% increase and marking the fastest annual rise since July 2023. Market-implied odds for a quarter-point rate hike by the BOJ on December 19 were last at 27%. The dollar eased 0.12% to 151.80 yen as of 0045 GMT, though it remained close to the overnight peak of 152.18 yen, its strongest level since November 27. Immediate resistance can be seen at 152.00 (Psychological level) an upside break can trigger rise towards 152.71 (23.6%fib). On the downside, immediate support is seen at 150.92(Dec 10th low) a break below could take the pair towards 150.53(38.2%fib).
Equities Recap
Asian equities faced pressure on Wednesday as investors awaited additional policy signals from China and key U.S. inflation data to gain insights into the central bank's path for rate cuts.
Hang Seng was down 0.78% , and South Korea's KOSPI was up by 1.02%. China’s A50 fell by 0.55%.
Commodities Recap
Oil prices rose on Wednesday, with market participants expecting demand to rise in the world's largest crude importer, after Beijing announced a looser monetary policy to stimulate economic growth in China.
Brent crude futures gained 36 cents, or 0.5%, to $72.55 a barrel by 0430 GMT, while U.S. West Texas Intermediate crude futures rose 36 cents, or 0.5%, to $68.95.
Gold prices held steady near a two-week high reached earlier on Wednesday, buoyed by rising geopolitical tensions and expectations of another rate cut by the Federal Reserve next week, ahead of the closely watched U.S. inflation report.
Spot gold was steady at $2,691.57 per ounce, as of 0601 GMT, and hit its highest since Nov. 25 earlier in the session. U.S. gold futures rose 0.5% to $2,730.50.
