enDaily Analysis 20/12/2024
Latest Economic and Fundamental Insights
Dollar holds steady at 2-year high ahead of PCE inflation data
The dollar index held around 108.4 on Friday, remaining at its highest level since November 2022 as investors awaited the latest report on the personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation.
Gold heads for weekly decline
On Wednesday, the Federal Reserve signaled a more cautious approach toward further easing, with dot chart projections pointing to only two rate cuts next year.
-Recent US GDP data also highlighted the resilience of the economy, and consumer spending was revised upward, supporting the argument for slower monetary easing.
This expectation has weighed on demand for gold, as limited monetary easing has reduced the appeal of non-yielding assets such as bullion.
Meanwhile, the near-term outlook for gold could face further challenges due to weaker physical demand in India, the main consumer, where government officials expect a sharp decline in gold imports in December.
However, the yellow metal has risen by about 25% this year, driven by monetary easing in the United States, safe-haven demand, and purchases by central banks.
-Gold steady; weaker Indian demand could weigh on market
Gold is trading steady in early Asian trade. The precious metal has begun to recover after a sharp drop following the Federal Reserve’s signal of a more cautious approach to interest rate cuts next year.
The near-term outlook for gold could be challenged by weak physical demand in India. ANZ adds that Indian government officials expect gold imports to fall sharply in December due to a lack of major festivals, among other factors.
Asian stocks hit a three-month low on Friday as investors awaited key U.S. inflation data that could ease or heighten concerns about stubbornly high price pressures, while the dollar rose to a two-year high.
Oil falls on concerns over demand growth and a strong dollar, with Brent crude trading at $72.00 and WTI at $68.00.
– Benchmark contracts are heading for a weekly loss of about 3%
Sinopec expects China’s crude oil imports to peak in 2025
-JP Morgan expects global oil surplus of 1.2 million barrels per day in 2025
China’s crude oil imports could peak in 2025 and the country’s oil consumption could peak by 2027 as demand for diesel and gasoline weakens, state-owned Sinopec said in its annual energy outlook released on Thursday.
“Crude oil benchmark prices are in a long-term consolidation phase as the market heads towards the end of the year due to uncertainty about oil demand growth,” said Emril Jamil, senior research analyst at the London Oil & Gas Exchange.
He added that OPEC+ will need to adjust supplies to lift prices and calm market nerves that are tense due to the ongoing revisions to its demand growth forecasts. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, recently lowered their forecast for global oil demand growth in 2024 for the fifth consecutive month.
Meanwhile, the dollar’s rise to a two-year high also weighed on oil prices, after the Federal Reserve indicated it would be cautious about cutting interest rates in 2025.
A stronger dollar makes oil more expensive for holders of other currencies, while a slower pace of interest rate cuts could weaken economic growth and reduce demand for oil.
-JP Morgan sees the oil market moving from balance in 2024 to a surplus of 1.2 million barrels per day in 2025. -The bank also expects non-OPEC+ supplies to increase by 1.8 million barrels per day in 2025 and OPEC production to remain at current levels.
In a move that could lead to a reduction in supplies, the Group of Seven nations are considering ways to tighten the price cap on Russian oil, such as imposing a full ban or lowering the price threshold, Bloomberg reported on Thursday.
Russia has breached the $60-per-barrel cap imposed in 2022 using a “shadow fleet” of ships, which the European Union and Britain have targeted with further sanctions in recent days.
Bitcoin price continued its losses and traded below the $100,000 level. Bitcoin is facing difficulties and may continue moving towards the support area at $92,000.
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: 2606.33
Scenario 1: Sell gold with a break and stability below 2601.34, targeting 2593.75 and 2585.91
Alternative scenario: Buy gold with a break and stability above 2611.58, targeting 2618.00 and then 2625.13
Comment: Trading below the resistances and averages suggests a decline.
CRUDE OIL
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: $68.98 per barrel
Scenario 1: Buy oil with a break and stability by closing a candle above the $69.34 levels, targeting $69.81 and then $70.37.
Alternative scenario: Sell oil by breaking the $68.66 level, targeting $68.14 and then $67.55
Comment: Trading below the resistances and averages suggests a decline.
EURUSD
General trend: Down
Interval: Half an hour (30 minutes)
Current price: 1.03927
Scenario 1: Sell the EUR/USD by breaking 1.03837, targeting 1.03677 and then 1.03464.
Alternative scenario: Buy the EUR/USD with a break and hold with a candle closing above 1.04064, targeting 1.04249 and then 1.04473.
Comment: Trading below the resistances and averages suggests a decline.
GBPUSD
Trend: Down
Interval: Half an hour (30 minutes)
Current price: 1.25051
Scenario 1: Selling the pound dollar with a break and stability below the level of 1.24856, targeting the price of 1.24615 and then 1.24394
Alternative scenario: Buy the pound dollar with a break and hold with a close above 1.25156, targeting 1.25397 and then 1.25683.
Comment: Trading below the resistances and averages suggests a decline.
NAS100
Trend: Down
Interval: Half an hour (30 minutes)
Current price: 21232
Scenario 1: Selling the Nasdaq with a break and stability with a close below 21174, targeting a price of 21050 and then 20943
Alternative scenario: Buy Nasdaq with a break and hold with a close above 21331 with a target price of 21435 then 21553
Comment: Trading below the resistances and averages suggests a decline.
Economic Calendar
(Times are in GMT+3)
-USA Core PCE Price Index (MoM) (November) 16:30
-USA Core PCE Price Index (YoY) (November) 16:30
-From Canada General Government Budget (Annual) (October) 19:00
Fundamental Analysis
The dollar index held around 108.4 on Friday, remaining at its highest level since November 2022 as investors awaited the latest report on the personal consumption expenditures price index, the Federal Reserve’s preferred measure of inflation.
Federal Reserve Chairman Jerome Powell indicated this week that personal consumption spending data is likely to show that the 12-month rate of inflation remains above the central bank’s 2% target.
His comments came after the Federal Reserve cut interest rates by a quarter percentage point, which was widely expected, although the central bank has indicated smaller cuts in 2025 due to persistent inflation.
The Fed now expects just two more rate cuts next year, a major shift from the four cuts previously forecast in its September forecast. Additionally, the Fed revised its 2025 economic outlook, raising its GDP growth and inflation forecasts while lowering its unemployment rate forecast. As a result, markets now price in a 90% chance that the Fed will leave rates unchanged in January.
Gold traded around $2,600 an ounce on Friday, heading for a weekly decline, pressured by hawkish expectations from the Federal Reserve.
Oil prices fell on Friday on concerns about demand growth in 2025, especially in China, the largest importer of crude, putting global oil benchmarks on track to end the week down about 3%.
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