enDaily Analysis 02/12/2024
Latest Economic and Fundamental Insights
Dollar rises on strong US economic outlook
The dollar index rose half a percentage point to above 106.2 on Monday, recovering some of last week’s losses amid continued resilience in the U.S. economy and a deterioration in the outlook elsewhere.
Gold falls as US dollar rises
Investors are looking to upcoming U.S. economic data for clues on what the Federal Reserve might do next on interest rates.
Key reports to be released include job openings, private sector wage growth, activity in the services and manufacturing sectors, and the unemployment rate.
Several Federal Reserve officials, including Chairman Jerome Powell, are also scheduled to speak this week.
Last week, data showed that progress in reducing inflation in the United States has stalled, suggesting a more gradual pace of interest rate cuts by the Federal Reserve.
-Currently, markets are pricing in a 65% chance of a 25 basis point rate cut at the Fed’s meeting later this month, with only two more rate cuts priced in throughout 2025.
-On the geopolitical front, the truce between Israel and the Iranian-backed Hezbollah appeared to be holding, despite mutual accusations of violating the ceasefire.
-Gold is down; the upside appears limited
Gold prices retreated in early Asian trading. The bullish momentum in the precious metal has stalled, as markets adjust to a more gradual pace of interest rate cuts by the Federal Reserve in 2025.
The bank added that the chances of gold prices rising were also reduced due to the strength of the US dollar index. The bank added that other factors including some easing of tensions in the Middle East, following a 60-day ceasefire agreement between Israel and Hezbollah, also limited potential upside gains.
Asian stocks rose on Monday, lifted by record high closes on Wall Street, while the dollar rebounded from multi-week lows against the yen and the British pound in a crucial week for U.S. interest rate expectations.
Oil rises on upbeat Chinese data and fragile truce between Israel and Lebanon, with Brent crude trading at $72.00 and WTI at $68.00.
“Oil prices managed to stabilize in the new week, as manufacturing activity in China continued to expand, reflecting some degree of policy success from recent stimulus efforts,” said Yip Junrong, market strategist at IG.
He added that this gave some comfort that demand for oil from China may continue for the time being.
-China’s factory activity expanded at the fastest pace in five months in November, a private sector survey showed, boosting optimism among Chinese businesses as U.S. President-elect Donald Trump escalates his trade threats.
However, Yep added that traders are monitoring developments in Syria and studying whether they might lead to an expansion of tensions in the Middle East.
A truce between Israel and Lebanon went into effect on Wednesday, but each side accused the other of violating the ceasefire.
In a statement, the Lebanese Health Ministry said several people were wounded in two Israeli airstrikes in southern Lebanon. Airstrikes have also intensified in Syria, where President Bashar al-Assad has vowed to crush rebels who have overrun the city of Aleppo.
-Last week, both benchmarks suffered a weekly decline of more than 3%, as concerns about supply risks from the conflict between Israel and Hezbollah and expectations of a supply surplus in 2025 eased, even as OPEC+ is expected to extend production cuts.
OPEC+ sources told Reuters last week that the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, have postponed their meeting to Dec. 5 and are discussing delaying an oil production increase that was due to start in January.
This week’s meeting is set to decide policy for the first months of 2025.
“Extending the production cuts would give OPEC+ more time to assess the impact of Trump’s policy announcements on tariffs and energy, as well as China’s reaction,” said Tony Sycamore, a market analyst at Sydney-based IG.
IG’s Yeap said that since the group’s production increase was widely expected, the market’s focus may be on how much the delay will impact crude prices.
“An indefinite delay may be the best scenario for oil prices, given that previous rounds of delays of a month or so have failed to push oil prices higher in line with what OPEC+ intended.”
Brent crude is expected to average $74.53 a barrel in 2025 as economic weakness in China clouds the demand picture and ample global supplies outweigh support from an expected delay to a planned OPEC+ output increase, a monthly Reuters oil price poll showed on Friday.
This is the seventh straight downward revision to the 2025 consensus for the global benchmark, which has averaged $80 per barrel so far in 2024.
-Bitcoin price is recovering above $96,000. Bitcoin is showing positive signs and is aiming for a fresh high above $98,800.
Smart technical reports
How they work
A likely scenario is proposed for today, and the probability of this scenario being achieved, according to technical analysis, may be between 60% and 75%.
If the first scenario fails, the probability of the second scenario being achieved will be between 60% and 75% certain.
The first scenario fails when the price reaches the level of the alternative scenario condition, and the alternative scenario is immediately activated and the prediction from the first scenario is cancelled.
These reports are not considered a substitute for the trader’s decision, but rather they are a tool to assist the follower in making his own decisions, as a reference based on the origins of classical technical analysis.
GOLD
General trend: Down
Interval: Half an hour (30 minutes)
Current price: 2625.97
Scenario 1: Sell gold with a break and stability below 2619.78, targeting 2613.33 and then 2605.50
Alternative scenario: Buy gold with a break and stability above 2631.16, targeting 2613.33 and 2605.50
Comment: Trading below the resistances and averages suggests a decline.
CRUDE OIL
Trend: Down
Interval: Half an hour (30 minutes)
Current price: $68.38 per barrel
Scenario 1: Sell oil by breaking the $67.90 level, targeting $67.38 and then $66.80.
Alternative scenario: Buy oil with a break and hold with a candle closing above $68.58, targeting $69.05 and then $69.61
Comment: Trading below the resistances and averages suggests a decline.
EURUSD
General trend: Down
Interval: Half an hour (30 minutes)
Current price: 1.05309
Scenario 1: Sell the EUR/USD by breaking 1.05147, targeting 1.04987 and then 1.04774.
Alternative scenario: Buy the EUR/USD with a break and hold with a candle closing above 1.05374, targeting 1.05559 and then 1.05783.
Comment: Trading below the resistances and averages suggests a decline.
GBPUSD
Trend: Down
Interval: Half an hour (30 minutes)
Current price: 1.26983
Scenario 1: Selling the pound dollar with a break and stability below the 1.26762 level, targeting the price of 1.26521 and then 1.26299
Alternative scenario: Buy the pound dollar with a break and hold with a close above 1.27072, targeting 1.27302 and then 1.27589.
Comment: Trading below the resistances and averages suggests a decline.
NAS100
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: 20946
Scenario 1: Buy Nasdaq with a break and hold to close above 21021 with a target price of 21124 then 21242
Alternative scenario: Sell Nasdaq with a break and hold with a close below 20864 with a target price of 20739 then 20632
Comment: Trading above the supports and averages suggests an upward trend.
Economic Calendar
(Times are in GMT+3)
From USA Manufacturing PMI (November) 17:45
From the United States of America, the Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (November) 18:00
Fundamental Analysis
The dollar index rose half a percentage point to above 106.2 on Monday, recouping some of last week’s losses amid continued resilience in the U.S. economy and a deteriorating outlook elsewhere.
The currency also received a boost after US President-elect Donald Trump threatened BRICS countries with 100% tariffs if they created or supported a new currency that could replace the dollar.
In addition, the dollar benefited from the decline of the euro, which was affected by political uncertainty in France.
Leaders of the far-right National Rally party claimed the government had rejected their calls for further budget concessions.
Meanwhile, the dollar also rebounded against the yen, as traders remained divided over the timing of the Bank of Japan’s next interest rate hike.
Gold fell below $2,630 an ounce on Monday, snapping a four-session winning streak as the U.S. dollar strengthened.
Oil prices rose on Monday, supported by upbeat factory activity in China, the world’s second-largest oil consumer, and as Israel resumed attacks on Lebanon despite a ceasefire deal, stoking tensions in the Middle East.
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