Market Analytics and Considerations
Key Notes
EUR/USD is awaiting a fresh trigger.
An aggressive ECB provides support for the euro. How quickly the ECB will bridge the monetary policy gap will be the new year’s motif for the most actively traded currency duo. Investors have dismissed worries about rising lending rates and energy prices. The single currency has regained substantially as a result of European policymakers’ switch to a hardline position on inflation and rapid rate increases, which has added to defy expectations of the Fed’s increase severity. That after holiday lull, the market is in search of a stimulus, and the FOMC minutes and nonfarm payroll may be that trigger. Key barrier at 1.0800 and support at 1.0450.
USD/CAD remains stable as the market remains risk-off
The weak market environment causes the Canadian currency to weaken. The beaten-down CAD is still in trouble because it still has to contend with a variety of challenges. Risk assets are under stress due to conservative attitude, and low prices for oil are inadequate as a floor. Traders may choose to stay with the safer allure of the dollar over the riskier Canadian dollar in 2023 as they prepare for macroeconomic worries; the latter may succeed thanks to the Fed’s relatively aggressive approach. The dual job report this last week may increase volatility, and the rise might resume with a break over 1.3800. The nearest support is at 1.3330.
XAU/USD recovers only tentatively
Due to a lack of a stimulus, gold rises when the US currency recovers. The softening of something like the dollar and anticipated softer Fed interest rate increases have increased demand for the yellow metal. China’s intention to restore its gates in January, however, gives rise to optimism that the world’s largest consumer of gold may once again show interest in the traditional marketplace. In a statistics opening week of the year, volatility may spike as liquidity returns to the market. The tail risk would be a US job market that continues to be strong, which would strengthen the dollar and trap lackadaisical gold bulls. 1725 is a new support, while 1875 is the following resistance.
S&P 500 is struggling as the Fed might not flinch.
Traders’ concerns about prolonged constriction cause the S&P 500 to decline. The Christmas brought some relief to market investors, but the coming year might not be without its difficulties. The nonfarm payrolls would be the key driver of the future move, as the Fed is committed to calm the job market and alleviate the wage stress. A strong result might fuel concerns that it would require further action from the central bank to loosen a tightening labor market, that would extend the bear market. China’s difficulties with restarting, meantime, cast doubt on the restoration of the worldwide supply chain. Index may touch 3700 after hitting resistance at 4130.
Economic Activity Calendar – New Year (2023)
