enDaily Analysis 12/07/2024
Latest Economic and Fundamental Insights
The dollar index held steady around 104.5 on Friday, set to fall for a second straight week as U.S. inflation slows and recent central bank comments boost expectations of a Federal Reserve interest rate cut in September.
Gold dips but heads for weekly gain on Fed rate cut bets
-US Producer Price Index due at 15:30 Mecca time, Federal Reserve member Goolsbee says economy is heading back to 2% inflation path, platinum and palladium are heading for weekly decline
Data on Thursday showed that U.S. consumer prices fell unexpectedly and the annual increase was the smallest in a year, pushing the Federal Reserve another step closer to cutting interest rates.
“Inflation expectations and the interest rate picture have moved in gold’s favor this week,” said Tim Waterer, chief market analyst at KCM Trade. “As we move closer to a lower interest rate environment, the conditions could be ripe for gold to hit new record highs before the end of the year.”
Bets on a September rate cut have risen to 93% from a 70% chance before the data was released, according to the CME FedWatch tool.
Low interest rates reduce the opportunity cost of holding non-yielding bullion.
San Francisco Federal Reserve President Mary Daly said Thursday she expects further easing in price and labor market pressures to warrant interest rate cuts, while Chicago Fed President Austin Goolsbee said the U.S. economy appears to be back on track toward 2% inflation.
Investors are now awaiting the US Producer Price Index reading, scheduled to be released at 15:30 Mecca time.
“The PPI numbers could be key in determining which side of the $2,400 level gold will end the week on,” Waterer said.
The yen swung between losses and gains on Friday in volatile trading, reflecting investor concern after some believed Tokyo had intervened to support the Japanese currency following a cooler-than-expected U.S. inflation report.
-Oil rises as U.S. inflation eases; Brent heads for weekly decline Brent at $85.00, WTI at $82.00
-Both contracts have gained in the previous two sessions, but are still poised for weekly declines.
Brent crude futures are expected to fall about 1% on the week after four weekly gains. West Texas Intermediate crude futures were broadly flat on the week.
Investor confidence was boosted after data released on Thursday showed U.S. consumer prices fell in June, raising hopes that the Federal Reserve will cut interest rates soon.
Lower interest rates are expected to boost economic growth, which will help increase fuel consumption.
-Bitcoin price started to decline again from $59,500 level. Bitcoin is moving downward, bears may gain strength below the $56,000 support level.
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: Upward
Interval: Half an hour (30 minutes)
Current price: 2404.44
Scenario 1: Buy gold with a break and stability above 2410.84, targeting 2417.27 and 2424.40
Alternative scenario: Sell gold with a break and stability below 2399.46, targeting 2393.01 and then 2386.78
Comment: Trading above the supports and averages suggests an upward trend.
CRUDE OIL
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: $82.02 per barrel
Scenario 1: Buy oil with a break and stability by closing a candle above the $82.19 levels, targeting $82.66 and then $83.22.
Alternative scenario: Sell oil by breaking $81.51 with a target price of $80.99 then $80.41
Comment: Trading above the supports and averages suggests an upward trend.
EURUSD
General trend: Upward
Interval: Half an hour (30 minutes)
Current price: 1.08621
Scenario 1: Buy EUR/USD by breaking 1.08785, targeting 1.08970 and then 1.091195.
Alternative scenario: Sell the EUR/USD with a break and stability with a candle closing below 1.08558, targeting 1.08398 and then 1.08185.
Comment: Trading above the supports and averages suggests an upward trend.
GBPUSD
Trend: Upward
Interval: Half an hour (30 minutes)
Current price: 1.29097
Scenario 1: Buy the pound dollar with a break and stability above the level of 1.29283, targeting the price of 1.29569 and then 1.29790.
Alternative scenario: Selling the pound dollar with a break and stability with a close below 1.28947, targeting 1.28749 and then 1.28525
Comment: Trading above the supports and averages suggests an upward trend.
NAS100
Trend: Down
Interval: Half an hour (30 minutes)
Current price: 20428
Scenario 1: Selling the Nasdaq with a break and stability with a close below 20366, targeting a price of 20309 and then 20258
Alternative scenario: Buy Nasdaq with break and hold with close above 20468 price 20538 then 20618
Comment: Trading below the resistances and averages suggests a decline.
Economic Calendar
(Times are in GMT+3)
From USA Producer Price Index (MoM) (June) 15:30
From USA Producer Price Index (YoY) (June) 15:30
Fundamental Analysis
The dollar index held around 104.5 on Friday, set to fall for a second straight week as U.S. inflation slows and recent central bank comments boost expectations of a Federal Reserve interest rate cut in September.
The index fell to a low of 104.08 on Thursday after data showed the annual U.S. inflation rate fell for a third straight month to 3% in June, the lowest in a year and below market expectations of 3.1%.
The monthly consumer price index also fell 0.1%, despite expectations for a 0.1% increase.
Markets are now pricing in more than 90% odds of a Fed rate cut in September, a big increase from about 70% earlier this week, with a second cut expected before the end of the year.
Investors are now looking ahead to U.S. producer price inflation data on Friday for further insights into price trends.
Externally, the dollar has been under pressure due to the rise in the yen amid suspected intervention by Japanese authorities.
Gold prices fell slightly on Friday, but were on track for a third straight weekly gain after cooler-than-expected U.S. inflation data boosted hopes the Federal Reserve will cut interest rates in September.
Oil prices rose on Friday amid signs of easing inflationary pressures in the United States, the world’s biggest oil consumer, although Brent crude was set to post a weekly decline.
Risk Disclaimer
Any information/articles/materials/content provided by WRC1 or displayed on its website is intended to be used solely for educational purposes only and does not constitute investment advice or a consultation on how the client should trade.
Although WRC1 has taken care to ensure that the content of such information is accurate, - it cannot be held responsible for any omission/error/miscalculation and cannot guarantee the accuracy of any material or any information contained herein.
Therefore, any reliance you place on such material is strictly at your own risk. Please note that the responsibility for using or relying on such material rests with the client and WRC1 accepts no liability for any loss or damage, including without limitation, any loss of profit which may arise directly or indirectly from the use of or reliance on such information.
Risk Warning: FX/CFDs are complex instruments and carry a high risk of losing money quickly due to leverage. You should consider whether you understand how FX/CFDs work and whether you can afford to take the high risk of losing your money.
You should make sure that, depending on your country of residence, you are allowed to trade with WRC1 products. Please ensure that you are familiar with the company’s risk disclosure.
