Currency Pairs Market Analysis

[Solid ECN]

Japanese Yen Strengthens Amid Inflation Progress

Solid ECN – The Japanese yen has recently seen an uptick, reaching approximately 142.2 against the dollar. This boost is largely due to comments made by Kazuo Ueda, the Governor of the Bank of Japan, hinting at improvements in inflation. Ueda expressed that Japan's economy is slowly but surely moving away from a low-inflation state and inching towards the price stability target. However, he also noted that the chances of this happening are not yet high enough.

Ueda further stated that if the positive feedback loop between wages and prices strengthens and the likelihood of sustainably achieving the 2% inflation target increases enough, the board may contemplate altering its monetary policy. Earlier in the month, the BOJ decided to stick with its ultra-accommodative monetary policy and refrained from making any statements about potential adjustments towards policy normalization in the coming year.

In terms of economic data, Japan's unemployment rate for November remained steady at 2.5%, which was in line with market predictions.​

 

[Solid ECN]

Iron Ore Prices Hit 18-Month High in Tianjin

At the end of December, iron ore prices soared past $140 per tonne in Tianjin. This is the highest in 18 months. Prices are expected to end the year 20% higher. This surge is driven by strong demand for industrial metals. Chinese government support has been a key factor since reopening from pandemic lockdowns. A notable move was in August when China suspended its annual steel production cap. This boosted the demand for iron ore. The People's Bank of China (PBoC) introduced several stimulus and monetary easing policies. These efforts are in line with Beijing's commitment to boost infrastructure and manufacturing in 2024. This price hike in iron ore comes even as China faces reduced property demand and lower construction activities due to major developer defaults.​

 

[Solid ECN]

Understanding EURJPY's Movement in the Ichimoku Cloud

Solid ECN – The EURJPY currency pair is presently undergoing a test of the Ichimoku cloud. Last week, the pair managed to cross above the cloud successfully. The subsequent decline post-breakout could potentially be viewed as a consolidation phase.

However, should the pair's decline persist below the cloud, the bullish bias would be rendered invalid, indicating a false Ichimoku signal.

From a technical perspective, as long as the pair remains within the channel and above the 50% Fibonacci support level, the short-term trend is bullish. In this scenario, the target could be the upper band of the flag channel.

This analysis is subject to market conditions and should be used in conjunction with other indicators.​

 

[Solid ECN]

Decoding Divergence: A Deep Dive into Gold Chart Patterns

Solid ECN – Upon first glance at the Gold chart, we notice the awesome oscillator bars signaling divergence. However, it appears that the divergence signal led to the consolidation phase. As a result, the XAUUSD price is currently ranging above $2,045. The ADX's style line in black is retreating below the 40 level, indicating that the market's momentum may slow down. Consequently, the gold price might remain within a narrow range until the holidays end.

The lower line of the bullish flag serves as support. If the bottom line is breached, the gold price could dip to the resistance area of the Ichimoku cloud. However, as long as the price continues to range inside the channel, the market maintains its bullish stance. In this scenario, the next target could be the 61.8% Fibonacci resistance, followed by the $2,090 mark.​

 

[Solid ECN]

Yen Dips as BOJ Ponders Stimulus Exit

Solid ECN – The value of the Japanese yen fell to 142.5 against the US dollar. This happened when the Bank of Japan's meeting summary revealed discussions. They discussed when to end their extensive stimulus program. While some board members aren't in a hurry to act. One member believes the bank has enough room to assess if a positive wage-inflation cycle is in place. BOJ Governor Kazuo Ueda recently said Japan's economy may soon overcome low inflation. He said it may also reach its price stability goal. Yet, he believes this chance is still not very high. Ueda said if wages and prices get better and hitting the 2% inflation goal looks possible, the board may change its money policy.​

 

[Solid ECN]

Euro Strengthens Against Dollar: A 5-Month Analysis

The Euro has risen to $1.1, a five-month high. This is due to the weakening of the dollar. The latest PCE inflation data from the US suggests that the Fed may reduce interest rates next year. The first cut could be in March. Traders expect the ECB to also cut borrowing costs next year. They may follow the Fed's pace. However, most policymakers are against this idea. Over the year, the Euro has gained about 3%.

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[Solid ECN]

USDCNH RSI Uncertainty, Bullish Outlook Remains

Solid ECN – The USDCNH currency pair is currently hovering near the Ichimoku Kinko Hyo, while the RSI indicator presents a level of uncertainty. Despite mixed signals from technical indicators, the market is trending upwards. The bullish channel, which began in mid-November 2023, supports this current trend. The bulls are now eyeing the 7.1577 to 7.1637 resistance zone. If USDCNH can demonstrate strength above the cloud, the price is expected to rise to the upper band of the bullish flag.

On the other hand, the lower band of the flag underpins the bullish scenario. However, if this level is breached downwards, the above scenario should be accordingly invalidated. In such a case, the price could drop to 7.1117, and potentially even to 7.09669.

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[Solid ECN]

Silver Price Dips, Trend Reversal Looming?

In today's trading, the price of Silver dipped to the Ichimoku cloud. The divergence in the awesome oscillator hints at a possible trend reversal or the start of price consolidation. The current bullish trend is supported by the 38.2% Fibonacci retracement level. If the bears push the price below this level, we could see the Silver price decline extend to 23.6%.

On the other hand, if the awesome oscillator bars gain momentum above the signal level and the RSI indicator moves above the median line, we might see the bullish wave continue. In this scenario, the price could rise to test the 61.8% support level again. Keep an eye on these indicators for potential market movements!

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[Solid ECN]

US Oil Trades Near $80.5, Bulls Eye 50% Fibonacci

Solid ECN – US oil is currently trading at around $80.5 per barrel. The upward momentum has eased near the 38.2% Fibonacci level, yet the bulls have successfully maintained the oil price above the simple moving average.

Notably, there is one bearish signal: the divergence in the Awesome Oscillator. Consequently, we can anticipate the price potentially dipping to the lower band of the bullish flag, with the 38.2% level acting as resistance.

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[Solid ECN]

NZX 50's Remarkable Climb: A Four-Month High

Solid ECN –The NZX 50, New Zealand's benchmark index, experienced a significant surge, gaining 90.25 points or 0.77% to close at 11,768.68 last Thursday. This marked the fourth consecutive session of growth, pushing the index to its highest point in over four months. This upward trend was observed amidst a relatively calm trading environment as the holiday season approached, with most sectors witnessing gains.

The positive sentiment was largely driven by the recent global stock market rally, with expectations of interest rate cuts in 2024 by major central banks, including the US Federal Reserve. Additionally, there is growing optimism that the Reserve Bank of New Zealand (RBNZ), known for its hawkish stance, might adopt a more dovish approach in the coming year. This could potentially involve a significant rate cut aimed at stimulating the sluggish economy, a move that could occur earlier than the central bank's late 2025 projection.

In China, New Zealand's primary trading partner, the two largest cities, Beijing and Shanghai, have recently lowered downpayment ratios and relaxed some housing qualifications for lower mortgages. This move has had a positive impact on the NZX 50.

Among the companies listed on the NZX 50, Restaurant Brands NZ saw a substantial increase of 5.3%, while Seeka Ltd. rose by 3.7%. Other notable performers included Delegat Group Ltd., Gentrack Group Ltd., and Winton Land Ltd., which gained 3.2%, 2.6%, and 1.9% respectively.​

 

[Solid ECN]

US Stock Futures Analysis: Steady End to Strong Year

Solid ECN – US stock futures remained stable on Thursday, as investors reflected on a year marked by robust gains in equities. The previous trading day saw the Dow increase by 0.3%, while the Nasdaq Composite rose slightly by 0.16%. The S&P 500 also saw a modest gain of 0.14%, approaching record levels. In this upward trend, eight out of the 11 S&P sectors closed higher, with real estate, healthcare, and consumer staples leading the charge.

The market's upward momentum is largely driven by the anticipation that the Federal Reserve will reduce interest rates next year. Bit Digital, an American bitcoin mining company, experienced an 18.6% surge in its shares. This followed its announcement to double its mining operations by 2024. Coherus BioSciences also enjoyed a significant 23.4% jump in its stock value after receiving US FDA approval for its new drug delivery device to fight infections.

Looking forward, both the Dow and S&P 500 are set to conclude the year with substantial gains, over 13% and 24% respectively. Meanwhile, the Nasdaq Composite has impressively rallied by 44.3% this year. This steady performance in US stock futures analysis reflects a year of consistent growth in the stock market.​

 

[Solid ECN]

AUDUSD Eyes May 2023 High Amid Mixed Signals

Solid ECN – The Aussie dollar is currently seeing a 20-pip dip from yesterday's high in this trading session. At the moment, the pair is testing the Ichimoku cloud on the 1-hour chart, while technical indicators are showing mixed signals.

Should the AUDUSD price stay above its current level, the uptrend is likely to persist. In such a scenario, the price could soar to 0.6900, which was the all-time high in May 2023.

It's important to note that the lower band of the bullish flag is key. As long as the price remains within the flag, the uptrend remains intact.​

 

[Solid ECN]

Swiss Franc Hits Record High Against USD & Euro

The Swiss franc strengthened past 0.85 against the USD in late December, marking its highest level since August 2011. It is poised to register an 8.5% increase against the dollar this year, influenced by differing interest rate outlooks from the Swiss National Bank (SNB) and the Federal Reserve. The Fed's latest meeting revealed dovish projections, further amplified by new data indicating a slowdown in US inflation, which put pressure on the greenback.

In Switzerland, despite a slowdown in inflation, the SNB has noted that the potential for price growth to increase justifies maintaining higher interest rates for now. Inflation in Switzerland was last reported at 1.4% in November. However, the central bank anticipates a rise towards its 2% target in the second and third quarters of 2024. This forecast leads investors to expect that any reductions in interest rates by the SNB will likely occur well after the Fed's similar actions.

The sustained prospect of higher interest rates from the SNB has also propelled the franc to a record high against the Euro, the currency used in neighboring countries.​

 

[Solid ECN]

Canadian Dollar Peaks on Inflation, BoC Outlook

Solid ECN – The Canadian dollar rose past 1.33 against the USD in December, reaching its highest level since early August. This increase is due to ongoing high inflation in Canada, leading to expectations that the Bank of Canada might take a more aggressive approach in its monetary policy. In November, the main inflation rate was at 3.1%, higher than the expected 2.9%. The closely watched core rate, which removes certain items, was at 3.5%, also higher than predicted.

This data supports the central bank's concern about continuing high inflation, suggesting they might keep their strict monetary policy and possibly raise interest rates. This is different from the more cautious approach of the Federal Reserve, which helped the Canadian dollar gain value against the US dollar.

Early reports for November show that Canada's economy grew compared to the previous month. However, updated figures for October indicate the economy didn't grow much, which is in line with the Bank of Canada's predictions for the economy.​

 

[Solid ECN]

Russia Manufacturing Growth at Near 7-Year High

Solid ECN – The S&P Global Russia Manufacturing PMI rose to 54.6 in December 2023, up from 53.8 in November. This increase marks the sector's quickest expansion since January 2017, driven by continued improvements in output and new order growth. The rate of job creation accelerated, reaching its highest point in three months. Additionally, backlogs of work decreased for the second consecutive month. Purchasing activity grew at a substantial rate, the second-strongest since August 2006.

In terms of pricing, input cost inflation slowed to a six-month low. This was due to increased supplier prices and unfavorable exchange rate movements. However, output cost inflation remained relatively stable and was among the weakest in the past six months. Finally, business sentiment weakened, falling to a three-month low.​

 

[Solid ECN]

Silver Near 38.2% Fibonacci: Signs of Market Reversal

Silver is currently trading near the 38.2% Fibonacci support level. On the XAGUSD 4-hour chart, a hammer candlestick pattern has emerged. The Stochastic oscillator is signaling that the market is oversold. In conclusion, if the silver price manages to stay above the Fibonacci support level, it's likely that the uptrend will continue. If this happens, the bullish target could be the 61.8% Fibonacci resistance level.​

 

[Solid ECN]

EURUSD Plunges: AO Divergence & Impact

The EURUSD currency pair experienced a sharp decline from 1.11394 in today's trading session, as previously hinted by the awesome oscillator's divergence.

Currently, the pair is testing the 23.6% Fibonacci level at 1.10403. Intriguingly, the RSI indicator is hovering near the median line and could dip below if selling pressure persists. The December 22 high at 1.1041 and the lower line of the bullish flag are jointly reinforcing the bullish trend. As long as the price stays above this level, the uptrend is likely to continue.

Conversely, a break below the bullish flag could signal further declines, with the next target being the 50% Fibonacci retracement level.​

 

[Solid ECN]

Pound Climbs to $1.28: BOE vs Fed Cuts in 2024

Solid ECN – The British pound rose to $1.28 at the end of 2023, touching its highest level since late July and poised for a gain of near 6% for the year, as investors anticipate that the Federal Reserve will slash borrowing costs more rapidly than the Bank of England. Recent data revealing an unexpected drop in US PCE prices has significantly bolstered the probability of Fed rate reductions as early as March, with an outlook of more than 150 basis points of cuts over the upcoming year.

At the same time, the most recent UK CPI report disclosed a slowdown in inflation to 3.8% in November, marking its lowest level since September 2021 and falling below the anticipated 4.4%. This development has prompted heavy speculation among traders regarding potential interest rate cuts by the Bank of England in 2024, despite BOE Governor Andrew Bailey's insistence on maintaining higher rates for an extended period.​

 

[Solid ECN]

Istanbul's Manufacturing PMI Sees Slight Rise in December 2023

Solid ECN – In December 2023, the Istanbul Chamber of Industry Turkey Manufacturing PMI slightly increased to 47.4 from 47.2 the previous month. This change indicates a minor improvement in the manufacturing sector's health. However, it still represents the sixth consecutive month of contraction. Tough market conditions, both domestically and internationally, caused a slowdown in new orders and decreased production.

In terms of prices, December saw another rise in input costs. This increase was driven by a weaker currency, higher wages, and increased raw material prices. Yet, the inflation rate slowed down for the fifth month in a row. On the other hand, output prices saw their sharpest increase since August.

Purchasing activities were reduced significantly, the most in four months. Consequently, input stock levels also dropped. Regarding employment, it remained stable in December, breaking a two-month trend of decline.​

 

[Solid ECN]

AUDUSD - RBA's Cautious Approach in Rate Cut Scenario​

The Australian dollar rose, reaching over $0.68. It's close to a five-and-a-half month high. This happened as people think the US Federal Reserve will lower interest rates soon, possibly in March. This expectation weakened the US dollar but helped other currencies.

Also, a report showed that China's manufacturing grew more than expected in December. This news influenced investors.

In Australia, investors are looking at what the Reserve Bank of Australia (RBA) might do next. Experts think the RBA will be slower to reduce rates compared to other countries. This is because it didn't raise rates as much as others. So, any rate cuts might be smaller or happen later.

Inflation in Australia is sticking around longer than in other places. RBA Governor Michele Bullock mentioned that the inflation problem is mainly local and due to increased demand. The market believes the RBA won't cut rates until the end of 2024.​