The Producer Price Index will be the final piece of U.S. data this year used by the Fed to determine its coming policy

What You Need To Know

The U.S. producer price index (PPI) will be released later today, marking the final piece of data this year for the Fed to gauge its next monetary policy moves. Meanwhile, there are some signs of a cooling labour market with higher Jobless Claims, signalling a recession. Both the PPI data and concerns over a recession will affect the coming Fed monetary policies and also the dollar’s strength. On the other hand, although China has dropped its strict pandemic curbs, oil prices recorded a weekly loss of more than 10% on concerns over the global economic outlook. 

Look Out For

Current rate hike bets on 14th December Fed interest rate decision: 

75 bps (21.8%) VS 50 bps (78.2%)

Market Overview

Economic Calendar

Market Movements

DXY

US Initial Jobless Claims increased by 4,000 to 230,000 in the week ended 3rd December, insinuating hopes of a slower rate hike decision from the Federal Reserve. The high-growth technology sector has struggled under the Federal Reserve’s aggressive interest-rate hikes. Economists have been watching several economic data more closely in recent weeks as they serve as an indicator to hint at upcoming recessions. Such behaviour means Friday’s Producer Price Index (PPI) and the University of Michigan’s consumer sentiment survey will likely dictate the overall US dollar trend. 

The Dollar Index is trading lower while currently testing the support level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 36, indicating the index is going into oversold territory.

Resistance level: 107.95, 110.25

Support level: 104.75, 101.50

XAU/USD

The US Dollar dipped yesterday, with investors bracing for downbeat economic data that underpinned the dollar-denominated gold. In the face of uncertainties ahead of monetary decisions from the global central bank and the release of several crucial data, investors have begun to shift their portfolio toward other safe-haven assets such as gold. As for now, investors will focus on US producer inflation data for November, due on Friday to gauge the path of price pressures in the country.

The gold market is trading higher while currently testing the resistance level. However, MACD has illustrated diminishing bullish momentum, while RSI is at 63, suggesting the commodity might trade lower as technical correction since the RSI retreated sharply from the overbought territory.  

Resistance level: 1810.00, 1875.00

Support level: 1730.00, 1680.00

EUR/USD

The Euro energy crisis with Russia cutting its gas exports to the region worsens the region’s economy with climbing inflation. It is expected that the European Central Bank (ECB) will accelerate the pace of rate hikes to curb the double-digit inflation rate in the region. Besides, the Fed is said to have a soft landing for its rate hike, meaning it will slow down the pace for the market to cope with. The Euro may continue its bullish run against the USD if the ECB has a faster pace in rate hikes. 

The pair is higher while currently testing the resistance level at 1.0600. However, MACD has illustrated diminishing bullish momentum, while RSI has gained to the 64-level from the 50-level, suggesting the pair is climbing higher at a slower pace. 

Resistance level: 1.0735, 1.0908

Support level: 1.0252, 1.0014

BTC/USD

BTC continues to struggle and has been consolidating for a month where investors still lack confidence in digital assets. The cooling labour market in the U.S. and a gloomy economic outlook deter investors from participating in the cryptocurrency market and turning to a safer asset class. On top of that, the ECB official called to ban crypto in the region and condemned the crypto-ecosystem as a new way of gambling. 

On the technical front, BTC has once again gained above 17000 but the momentum is minimal. The RSI has surged from 39-level to 62-level, which depict some gains for BTC. The MACD is also able to stay above the zero line with a neutral signal shown. 

Resistance level: 17859, 18690

Support level: 17040, 15663

DJ30

The Dow rebounded ahead of the release of crucial inflation data. Investors are currently expecting that the Producer Price Index (PPI) will expect to show a further easing sign. A continued retreat in Producer Price Pressure will increasingly secure a smaller rate hike of 50 basis points during the FOMC meeting next week. However, the steep inversion in the US Treasury yield curve, an indicator of recession, continued to insinuate further uncertainty in the global financial market. As for now, investors will continue to eye on developments regarding the monetary policy and several economic data for further trading signals.

The Dow is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 49, suggesting the Dow will likely extend its losses as the RSI stays below the midline.

Resistance level: 34390, 36810

Support level:  31370, 28760

GBP/USD

The pound edged higher against the weakened dollar on Thursday as the U.S. initial jobless claims data showed an increase of 4,000 to 230,000. The pair is trading at $1.2257, heading toward the previous resistance at $1.2343 as of writing. However, according to the Royal Institution of Chartered Surveyors, the data showed the largest decline in the house price in November since early in the Covid-19 pandemic. The survey showed that demand from buyers and sales activity slowed due to higher borrowing costs. Therefore, investors are pondering how interest rate hikes by the Bank of England will worsen the recession outlook in Britain. 

The MACD line is crossing upward, showing a neutral-bullish momentum. Investors could keep an eye on the next resistance level at $1.2343 as the pair moves upward. RSI hovers around 61, suggesting the trend is to remain neutral-bullish in the short term. 

Resistance level：1.2343， 1.2670

Support level： 1.1936，1.1649

NAS100

Nasdaq rose 1.13% to 123.45 points as U.S. initial jobless claims filing data increased moderately last week, while unemployment rolls hit a 10-month high toward the end of November. Most mega-cap technology and growth stocks gained. Apple Inc (AAPL.O), Nvidia Corp (NVDA.O) and Amazon.com Inc (AMZN.O) rose between 1.2% and 6.5%. Moreover, recent data releases have vacillated markets, with investors lacking clues ahead of Federal Reserve rate hike decisions.

The MACD is moving down to the zero line, suggesting a bearish momentum ahead. The RSI is trading at 48, which also indicates a neutral-bearish momentum. 

Resistance level: 11997, 12647

Support level: 11445，10469

CL OIL

Oil prices extended their losses for a fifth straight session despite the closure of a major Canada-to-US crude pipeline, with investors bracing for global economic slowdowns that would continue to weigh on the black commodity. Yesterday, Canada’s TC Energy claimed they would shut its 622,000 barrel-per-day Keystone pipeline, the primary line shipping heavy Canadian crude from Alberta to the US Midwest and Gulf Coast. Oil prices were first surging after the company announced the closure. Still, the rally dissipated following analysts expecting that the US Gulf would likely have enough inventory to handle the short-term supply disruption.

Crude oil prices are trading lower following the prior retracement from the resistance level. However, MACD has illustrated diminishing bearish momentum, while RSI is at 36, indicating the commodity might trade higher as RSI rebounded sharply from the oversold territory.

Resistance level: 76.00, 83.10

Support level: 69.90, 64.70