December 9, 2024
As this year steps to an end, the week from Monday, 9 December, to Friday, 13 December 2024, presents several notable opportunities and risks in the forex market, shaped by varying global economic trends, central bank policies, and geopolitical developments.
KEY ECONOMIC INDICATORS
U.S. Nonfarm Payrolls:
- Resilient job market: Expectations suggest that the U.S. economy added approximately 200,000 jobs in November, recovering from the slower October growth affected by strikes and hurricanes. December’s preliminary numbers show an even more substantial increase of 216,000 jobs, surpassing expectations of 170,000.
- Impact of Fed’s decision on rate cuts: While the Fed recently held interest rates steady at 4.50%-4.75%, it signalled no imminent reductions until confidence in inflation nears its 2% target. Strong employment growth might support this hawkish outlook, bolstering the U.S. dollar.
Central Bank updates:
- European Central Bank (ECB): The ECB cut its policy rates by 25bp on 17 October, lowering the rate to 3.40%. We expect a further 25bp cut at December’s governing council meeting and quarterly 25bp cuts throughout 2025 (in March, June, September, and December), for a total of 100bp for the year.
- The Bank of Canada (BoC): The Bank of Canada cut its key interest rate by 50bps to 3.75% in its October 2024 decision, as expected, signalled that it will continue to lower its rate should the economy develop as expected. The decision increased the pace of rate cuts following three 25bps slashes, aligning with recent data that indicated a sharp slowdown in Canadian inflation. Headline price growth fell to 1.6% in September, below the target of 2% for the first time in three years.
Energy markets and geopolitics:
Crude oil prices remain sensitive to geopolitical developments and potential OPEC production shifts. Any new tensions or supply disruptions could affect energy stocks and broader inflation expectations.
MARKET MOVER
XAU/USD – (bearish outlook)
- Daily momentum has paused, shifting our bias to neutral.
- Current levels are at overbought extremes.
- Market activity has been choppy and volatile.
- The 2657.3 level has acted as a key pivot.
- Overnight dips were met with buying interest, leading to sustained upward pressure.
Trade Opportunity: Target 1: 2605.5 // Target 2: 2595.5 // Expires: 07 December 2024
GER40 DAX – (bullish outlook)
- Price action has pushed to a new all-time high at 20,376.
- There are no clear signals suggesting the upward momentum is losing steam.
- A breakout above the recent high of 20,376 could pave the way for further upside.
- Our outlook remains bullish.
- We anticipate gains to extend further today.
Trade Opportunity: Target 1: 20685 // Target 2: 20785 // Expires: 07 December 2024
EUR/USD – (bearish outlook)
- Sustained upward momentum from 1.0472 led the pair to post net daily gains yesterday.
- While bullish momentum remains intact, the pair has paused near a prior swing high at 1.0597.
- Upcoming economic data could negatively impact the short-term technical outlook.
- A Fibonacci confluence zone is identified at 1.0380.
- A decisive break below 1.0542 is required to confirm continued downward momentum.
Trade Opportunity: Target 1: 1.038 // Target 2: 1.035// Expires: 07 December 2024
USD/JPY (bullish outlook)
- A five-wave bullish structure has been completed at 151.23.
- Selling pressure emerged during the Asian session.
- The decline has been mixed and volatile, typical of corrective patterns.
- Overnight gains were met with selling interest, leaving room for further bearish pressure this morning.
- Economic data releases could negatively impact the short-term technical outlook.
Trade Opportunity: Target 1: 151.01 // Target 2: 151.69 // Expires: 07 December 2024
MARKET NEWS
Foreign exchange
- The U.S. Dollar Index dropped 0.57% to 105.72 ahead of today’s U.S. nonfarm payrolls report, which is expected to show a 194,000 increase for November.
- Despite weaker eurozone data, EUR/USD rose 77 pips to 1.0587, retail sales down 0.5% (vs. -0.4% expected) and Germany’s factory orders falling 1.5% (vs. -2.1% forecasted).
- GBP/USD climbed 55 pips to 1.2757.
- USD/JPY fell 51 pips to 150.09, and USD/CHF declined 61 pips to 0.8780.
- AUD/USD gained 23 pips to 0.6451, while USD/CAD slid 53 pips to 1.4020.
Commodities and Stocks
- U.S. equity markets closed lower on Thursday as investors exercised caution ahead of key jobs data. The S&P 500 fell 11 points (-0.19%) to 6,075, the Dow Jones Industrial Average dropped 248 points (-0.55%) to 44,765, and the Nasdaq 100 declined 67 points (-0.31%) to 21,425.
- The materials and industrial sectors led the losses, while consumer discretionary and consumer staples outperformed.
- On the economic front, weekly initial jobless claims rose to 224,000, exceeding the 214,000 forecasts. Later today, nonfarm payrolls are projected to grow by 194,000 in November, with the unemployment rate expected to hold steady at 4.1%.
- The 10-year U.S. Treasury yield held steady at 4.182%.
- European equities advanced, with the DAX 40 up 0.63%, the CAC 40 gaining 0.37%, and the FTSE 100 rising 0.16%.
- In commodities, gold dropped $18 (-0.68%) to $2,632, while WTI crude oil slipped $0.24 (-0.35%) to $68.30 after OPEC+ announced a three-month delay in production increases, now set for April.
Asian Session Updates
- During Asian trading, EUR/USD and GBP/USD remained steady at 1.0580 and 1.2750, respectively.
- USD/JPY edged lower to 149.85, as Japan’s household spending declined 1.3% year-on-year in October, beating the expected 2.4% drop.
- Gold touched an intraday low of $2,641 before recovering to $2,632.
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