DBG Markets: Market Report for Dec 18, 2024

Market Overview

Markets see gains for the dollar despite expectations of a high likelihood of a rate cut this coming Thursday. Analysts may also be pricing in the possibility that the Federal Reserve will fail to deliver on these expectations, thereby pushing the dollar higher.

Until the rate cuts are implemented, we may witness continued strength in the dollar across the board, a trend that has largely characterized the currency throughout Trumps administration.

On December 17, 2024, the stock market saw mixed results across major global indexes, reflecting a cautious sentiment among investors as they awaited upcoming economic data and central bank decisions.

In the U.S., the Dow Jones Industrial Average declined by 0.3%, closing at 43,717.48. This marked the Dows eighth consecutive day of losses, its longest losing streak since 2018. Conversely, the S&P 500 rose by 0.4%, finishing at 6,074.08, while the Nasdaq Composite posted a notable gain of 1.2%, closing at 20,173.89.

GOLD - Gold prices remain consolidated but have seen slight losses against the dollar despite widespread expectations of a rate cut. November U.S. retail sales came in better than expected, adding to the hesitation in the gold market. Many traders anticipate a stronger dollar in the coming days, leading to reduced enthusiasm for gold buying. Technical indicators show increased selling momentum, with the RSI printing overbought levels and the MACD crossing lower, signaling potential for continued selling.

SILVER - Silver prices are consolidating, hovering near 30.6675. While the metal has enough momentum to attempt another swing low, the RSI also shows overbought levels, indicating stronger selling pressure. The MACD is similarly aligned with increased selling momentum, though price action suggests a possible upward turn if buyers re-enter the market.

DXY - Markets are largely expecting the Federal Reserve to announce a 25-basis-point interest rate cut at the conclusion of its two-day policy meeting on Wednesday. According to the CME's FedWatch tool, futures imply a 97% probability of such a move.

"The market is trying to debate whether it's time to fade the dollar, which has had an incredible run this year," said Marvin Loh, senior global market strategist at State Street in Boston. "But it seems hard to push back against U.S. exceptionalism and a stronger dollar going into the new administration, whether we're talking about a Fed that will probably not seem as dovish as it did in September or the challenges that keep popping up in emerging and developed markets, making the dollar a safe haven."

GBPUSD - The pound gained against the dollar in yesterdays trading, supported by unexpectedly strong UK employment data, which reported a rise of 0.3K compared to the anticipated 28.2K. However, price action remains limited until it reaches the previous swing high. MACD movement is flat, while the RSI indicates sufficient strength to maintain buying pressure. Nevertheless, there is potential for a bearish continuation after a few more price prints.

AUDUSD - The Australian dollar is under pressure, dropping below 0.63407 amid rising geopolitical tensions in Israel and Ukraine, which have made risk-sensitive assets less appealing. The MACD and RSI both signal increased selling volume and momentum, suggesting a continuation of the bearish trend.

NZDUSD - The New Zealand dollar continued its bearish trend following yesterday's trading session, with technical divergence supporting increased selling momentum. Both the MACD and RSI confirm a strong bearish run, and further downside is expected.

EURUSD - The euro is consolidating between the 1.04672 range and relevant resistance levels. MACD readings show bearish momentum, while the RSI indicates continued selling after a slight adjustment from oversold conditions. While a minor upside retracement is possible, overall price action suggests a continuation of the downward trend. The euro also weakened following data showing a worsening business climate in Germany, although investor sentiment showed some improvement.

USDJPY - The yen recovered some losses after prices dipped slightly above 153.868. The RSI indicates oversold conditions, signaling potential upside momentum, although the MACD remains aligned with continued selling pressure. A shift in overall price momentum suggests further yen strength could develop if the market breaks below previous swing lows.

USDCHF - The Swiss franc is showing increased buying momentum, with the RSI signaling oversold levels. While the MACD has recently crossed lower, current price action points to a possible end to the pullback, with upward momentum resuming after prices breached 0.89431.

USDCAD - The Canadian dollar continues to weaken, with prices reaching 1.44440. Both the MACD and RSI indicate a healthy upward trend, and there appears to be little resistance to further gains in the current environment.