DBG Markets: Market Report for Dec 11, 2024

Market Overview

Asian stock markets and the U.S. dollar paused on Wednesday as investors braced for potential rate cuts in Canada and awaited a critical U.S. inflation report. Expectations for a rate cut by the Federal Reserve next week remain high, with an 85% probability priced into markets. However, with Wall Street indices hovering near record highs, the potential for disappointment looms.

Canada, which has already slashed rates by 125 basis points during this cycle, is now anticipated to deliver an additional 50 basis points in cuts, bringing its overnight rate to 3.25%. This expectation is driven by a sharp rise in Canada‘s unemployment rate to 6.8% in November, the highest in eight years. Similarly, markets are pricing in a European Central Bank rate cut on Thursday, while the Swiss National Bank has a 61% chance of implementing a 50-basis-point cut, potentially cooling the franc’s rally.

In Australia, the Reserve Bank held rates steady at 4.35% on Tuesday but signaled a shift in tone by omitting prior language about maintaining restrictive policies. This change sent the Aussie dollar tumbling, highlighting growing rate-cut expectations.

GOLD - GOLD prices are now bullish, following a shift in overall price momentum beyond the previous swing high. The RSI indicates strong momentum with divergence, suggesting the potential for a market shift soon. The MACD also demonstrates robust momentum and strength in buying activity.

China has also resumed the buying of GOLD to up their reserves, contributing to the strength of GOLD.

SILVER - SILVER prices remained flat after yesterdays trading session, showing no clear movement beyond the previous swing high. Current lows may represent a potential bottom before a bullish continuation. The RSI indicates consolidation, while the MACD reflects weakening bearish momentum, with crossover signals suggesting the possibility of a bullish shift. Overall price action supports the expectation of another bullish run leading into next week.

DXY - The dollar holds gains ahead of the CPI report. The RSI shows oversold conditions despite weak pullbacks in price, highlighting strength in bullish momentum. The MACD has recently crossed, but as with the previous crossover, this one is expected to be short-lived. Overall, price momentum remains consolidated as traders anticipate the upcoming inflation data, which will shape rate-cut expectations next week.

GBPUSD - As illustrated in current charts, the Pound remains in consolidation, waiting for clues from the CPI report to decide market direction. Both the MACD and RSI remain neutral, reflecting the market's uncertainty. Further price data will help determine whether the Pound breaks its current range or maintains consolidation.

AUDUSD - The Aussie dollar has dropped to new lows, with the MACD indicating strong momentum and strength. While the RSI signals exaggerated levels and a pullback from the low is possible, bearish continuation is anticipated. A deeper retracement may pave the way for further dollar weakness, but the Aussie remains under pressure due to growing expectations of rate cuts. The RBA's decision to leave rates unchanged at 4.35% came with significant developments, including the removal of previous language about restrictive policy.

NZDUSD - The Kiwi finds increased selling momentum, as supported by the RSI and MACD. Despite a small pullback in price, overbought RSI levels further confirm bearish conditions. Analysts expect continued selling pressure in the market as overall price action signals bearish continuation.

EURUSD - The Euro is exhibiting buying continuation, although current price action suggests consolidation. The MACD has just crossed into bullish territory, but the RSI signals overbought levels despite weak market movements. Analysts anticipate a bearish reversal in price momentum, with continued consolidation as traders await further clarity from the ECB.

USDJPY - The Yen continues to weaken as prices trend higher, reflecting strong buying momentum. Despite a pullback, the MACD suggests bullish continuation, and the RSI remains at oversold levels. Market sentiment favors further price increases, indicating ongoing strength in buying trends.

USDCHF - The Franc has seen renewed weakness amid expectations of an SNB rate cut. The MACD reflects increased buying momentum, and the RSI supports this outlook despite smaller levels and divergence. Analysts forecast continued bullish activity in the Francs price movement.

USDCAD - The Canadian dollar faces heightened pressure ahead of the anticipated Bank of Canada rate cut. A supersized cut could weaken the CAD further, pushing prices beyond 1.41774. The RSI shows exaggerated selling levels, while the MACD indicates a possibility of deeper retracement. However, current price levels may already represent the bottom before further movement upward.