DBG Markets: Market Report for Dec 13, 2024

Market Overview

Global stock markets are down. In the U.S., the S&P 500 fell by 0.5% to about 6,074.16, with the Dow Jones Industrial Average down 0.22% at 44,027.81, and the Nasdaq Composite dropping 0.7% to 21,726.27 after briefly exceeding 20,000.

Asian markets followed suit, with major indices like the Shanghai Composite, Hang Seng Index, and Nikkei 225 each declining around 1%. This downturn is linked to a stronger U.S. dollar and concerns over upcoming inflation data that may affect Federal Reserve policies.

In Europe, the FTSE 100 fell 0.2% to 8,316.96, and the DAX 40 decreased by 0.1% to 19,408.00, while the CAC 40 rose by 0.2% to 7,173.00. The European Central Bank recently cut its key interest rate to 3.00% and revised growth and inflation forecasts downward, suggesting a cautious monetary approach. Meanwhile, the Swiss National Bank surprised markets with a 50 basis point cut, further affecting investor sentiment amidst mixed signals of economic support and inflation concerns.

GOLD - Gold prices are declining despite expectations of a weaker dollar due to potential rate cuts next week and ongoing Syrian conflicts. Concerns have eased slightly after a new government was established in Syria, ousting Assad, and Israel's airstrikes targeted Syrian military assets.

Additionally, stronger-than-expected U.S. PMI data and some easing of Middle East tensions may be influencing gold's decline. Reports suggest Hamas has agreed to key ceasefire demands from Israel, raising hopes for a potential hostages release soon.

Despite the dip, analysts remain optimistic due to a 96.4% likelihood of a rate cut next week, as per the CME FedWatch tool. While the RSI shows overbought conditions and the MACD indicates stronger selling momentum, the price action respects previous swing lows, suggesting further data is needed to confirm a shift in momentum.

SILVER - Silver prices are also weakening, influenced by hotter-than-expected PPI data and reduced Middle East tensions. Price action indicates testing of previous swing lows, with a breach signaling a potential momentum shift.

While a high probability of market consolidation remains, MACD shows robust selling momentum and volume. Similarly, the RSI reveals overbought levels despite slight pullbacks, signaling strong bearish momentum.

DXY - The dollar strengthened following the PPI release despite widespread bets on a rate cut. This suggests that weakness in the dollar may already be priced in, pending the Fed's announcement. Until then, the dollar remains bullish compared to other currencies, bolstered by geopolitical developments across multiple conflict zones.

Fundamentally, the dollar is expected to weaken over time. However, technical indicators such as the MACD and RSI currently show growing momentum and strength, supporting a bullish outlook for the near term.

GBPUSD - The pound has weakened against the dollar after the previous session. The MACD shows growing bearish momentum, with the RSI following suit. If prices fall below the previous swing low, a stronger bearish shift is likely.

AUDUSD - The Australian dollar remains under pressure, continuing its bearish trajectory after failing to break above 0.64292. Technical indicators, including the MACD and RSI, confirm increased selling momentum and volume.

NZDUSD - The New Zealand dollar is expected to weaken further as markets price in the Reserve Bank of New Zealand's ongoing easing cycle. A 66% chance of a 50 basis point rate cut in February is anticipated. Price action supports a bearish continuation, with both MACD and RSI indicating strong selling momentum and divergence in price.

EURUSD - The euro is showing increasing weakness after prices fell below the previous swing low, signaling a shift to bearish momentum. The MACD and RSI confirm this trend, with the latter showing oversold levels even after a large sell swing, highlighting strong bearish strength.

USDJPY - The yen fell 1.8% against the dollar this week as markets scaled back the likelihood of a Bank of Japan rate hike next week to just 22%. Sources suggest the BOJ will maintain its current policy, with analysts attributing this to anticipation of economic impacts from Trumps trade policies. Technical indicators such as MACD and RSI show bullish signals, supporting expectations of further yen weakness against the dollar.

USDCHF - The Swiss franc has weakened, with price action shifting back to bullish momentum. Technical indicators reflect increased buying strength, signaling potential for continued upward movement.

USDCAD - The Canadian dollar remains weak, but MACD and RSI indicate rising momentum for buying. Price action supports a continuation of bullish movement, with no immediate signs of reversal.