The Week Ahead 04th – 07th December: Fed officials hinted at a dovish turn ahead of important labour market data
<p>Welcome to Key To Markets preview of the Week Ahead.</p>
<h2>Currency Pair Performance</h2>
<p>5-day performance as of November <strong>30, 2023. 10:00 GMT</strong>.</p>
<p><img decoding="async" fetchpriority="high" class="alignnone wp-image-27399 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr.png" alt="" width="631" height="293" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr.png 631w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr-300×139.png 300w" sizes="(max-width: 631px) 100vw, 631px" /></p>
<p>Source: finviz.com</p>
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<h2>10 Big Stories Last Week</h2>
<p>In case you missed it…</p>
<p><strong>Fed officials hinted at a dovish pivot.</strong> Fed speakers, most notably Fed Governor and known hawk Christopher Waller, signaled that the Fed could consider rate cuts should inflation keep falling.</p>
<p><strong>Eurozone inflation cooled by more than expected.</strong> CPI eased to 2.4% YoY in November, down from 2.9% in October. The data supports the view that the ECB has finished hiking rates.</p>
<p><strong>GBP/USD rose to a 3-month high.</strong> Hawkish comments from BoE Governor Andrew Bailey and dovish comments from the Fed lifted GBP/USD to 1.27.</p>
<p><strong>Salesforce jumped after earnings.</strong> The bellwether for company spending posted an EPS of $2.11 ahead of the $2.06 forecast on revenue of $8.72 billion. Guidance was also ahead of forecasts.</p>
<p><strong>Amazon announced a record-breaking Cyber Monday period.</strong> The e-commerce giant didn’t provide numbers but said it was its biggest-ever holiday shopping event.</p>
<p><strong>Gold hit a 7-month high.</strong> Falling yields, a weaker USD, and bets that the Fed could start cutting interest rates as soon as March next year boosted Gold towards $2050.</p>
<p><strong>Charles Munger died.</strong> Warren Buffet’s longtime investing partner died at the age of 99. Carles helped Buffet turn Berkshire Hathaway into an $800 billion success.</p>
<p><strong>Microsoft secured a board seat at OpenAI.</strong> This is a non-voting seat after the chaos surrounding the ousting and rejoining of Open AI CEO Sam Altman.</p>
<p><strong>The OPEC+ meeting went ahead.</strong> The group of oil-producing nations met on November 30th after pushing the date back from November 26th. The group extended supply cuts.</p>
<p><strong>US bonds set for the best month in 40 years.</strong> US Treasuries are set to book the best monthly performance in 4-decades on growing optimism about interest rate cuts.</p>
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<h2>Chart of the Week</h2>
<p><img decoding="async" class="alignnone wp-image-27402 size-full" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr2.png" alt="" width="662" height="341" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr2.png 662w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr2-300×155.png 300w" sizes="(max-width: 662px) 100vw, 662px" /></p>
<p>To say that 2023 has been a challenging year for bonds would be an understatement until November. Treasuries have performed an impressive reversal in what is set to be the best month for US bonds since 1980, sparking a pan-market rally in almost everything except the USD.</p>
<p>Returns on the Bloomberg US Aggregate Index reached 4.9% in November as the yields on the 10-year US treasury dropped 0.65% to 4.29%. The moves come amid signs that the economy and inflation are slowing and that the Federal Reserve is done hiking interest rates.</p>
<p>Recent data has reinforced the view of a Goldilocks slowdown; 5% yields are a distant memory, which has helped boost global equities. The MSCI World Index is set to rise 8.9% this month.</p>
<p>Veneer Bhansali of LongTail Alpha said, “These types of massive moves can only be ascribed to positioning changes.”. In other words, the market is preparing for plenty of rate cuts next year.</p>
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<h2>5 Things to Watch This Week</h2>
<p><strong>1. US non-farm payroll</strong><br />
The October nonfarm payroll rose by 150,000, below the average monthly gain of 258,000 over the previous twelve months and weaker than the 180,000 jobs expected. Unemployment ticked higher to 3.9% from 3.8% after the Fed’s aggressive rate hiking cycle. The market will be looking for a continuation of this trend. Signs of weakness creeping into the jobs market could fuel bets that the Fed could cut interest rates sooner than initially expected.</p>
<p><strong>2. RBA rate decision</strong><br />
The RBA will announce its interest rate decision on Tuesday, the 4th of December. The RBA hiked rates to a 13-year high of 4.35% in the previous meeting, which, according to the OECD, is probably the peak rate. The market is pricing in just a 2% chance of a hike. Australia’s inflation rate eased to 4.9% in October, supporting expectations that the RBA will leave rates on hold. This is the final meeting of the year, with the following announcement in February.</p>
<p><strong>3. BoC rate decision</strong><br />
The BoC interest rate decision will take place on Thursday and comes after Governor Tiff Macklem hinted that peak interest rates had been reached in the speech last week. He suggested that the current measures could be sufficient to bring inflation back to 2%, indicating a shift in the central bank strategy and supporting market expectations that the central bank could be at the end of its tightening cycle. No change in policy is expected from the BOC, although policymakers may look to keep the door open to a further hike should it be needed.</p>
<p><strong>4. Eurozone retail sales</strong><br />
Eurozone retail sales declined by 0.2% in September, which was in line with forecasts. The data comes as the eurozone economy shrunk by 0.1% in the third quarter, and PMIs remained in contraction territory. However, with inflation cooling and consumer confidence ticking modestly higher, the outlook for the consumer could finally be improving. Stronger-than-expected sales could fuel expectations that the downturn in the eurozone economy had bottomed out.</p>
<p><strong>5. Broadcom earnings</strong><br />
Broadcom is set to release earnings on December 7. Wall Street is expecting an EPS of $10.96 on revenue of $9.28 billion. The figures come as Broadcom closes its $69 billion acquisition of VMWare. The semiconductor and infrastructure software company’s share price has skyrocketed almost 80% year to date on the back of the AI wave while chip demand for personal computing and smartphones has been lukewarm this year. analysts are expecting the Q4 outlook to be more favourable. As a result, attention will be on guidance. Any strategic investments and commitments to AI make a more bullish case for the stock.</p>
<h2>Economic Calendar Highlights</h2>
<p><img decoding="async" class="alignnone size-full wp-image-27405" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr3.png" alt="" width="679" height="559" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr3.png 679w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/gr3-300×247.png 300w" sizes="(max-width: 679px) 100vw, 679px" /></p>
<p>Source: FXStreet.com</p>
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<h2>Technical Analysis:</h2>
<p>TA of the major asset classes (Forex – Commodities – Indices…).</p>
<p><strong>EUR/USD (D1)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone size-full wp-image-27408" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/EurUSd-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/EurUSd-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/EurUSd-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/EurUSd-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/EurUSd-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/EurUSd-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/EurUSd-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /><br />
EUR/USD seems to be experiencing a slight pullback after a recent rally. The currency pair remains above the 50-day SMA, indicating an ongoing uptrend. However, the RSI appears to have retreated from previous higher levels, suggesting a reduction in bullish momentum. The price is currently testing the newly established support at around 1.075. If it holds, the pair may resume its uptrend with potential resistance around 1.085.</p>
<p><strong>GBP/USD (D1)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone size-full wp-image-27411" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GbPUSd-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GbPUSd-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GbPUSd-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GbPUSd-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GbPUSd-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GbPUSd-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GbPUSd-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /><br />
The GBP/USD pair continues to show strength, maintaining its position above the 50-day SMA. The RSI is slightly lower than before, now closer to the mid-range, which may imply reduced buying pressure. The pair is approaching the resistance level at 1.256, and a break above this could confirm the continuation of the bullish trend.</p>
<p><strong>USD/JPY (D1)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone size-full wp-image-27414" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/USDJPY-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/USDJPY-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/USDJPY-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/USDJPY-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/USDJPY-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/USDJPY-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/USDJPY-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /><br />
USD/JPY remains within the previously defined range. The RSI is still around the mid-level, confirming the lack of strong momentum in either direction. The consolidation pattern continues, with the price hovering near the midpoint between the support at 147.5 and resistance around 151.3</p>
<p><strong>XAU/USD (Gold) (D1)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone size-full wp-image-27417" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GOLd-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GOLd-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GOLd-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GOLd-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GOLd-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GOLd-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/GOLd-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /><br />
Gold is currently testing the resistance level at around 2043. The RSI is still in the bullish territory but not indicating overbought conditions, which could be favorable for a potential breakout. If gold successfully breaches this resistance, the uptrend could be set to continue.</p>
<p><strong>Brent Crude Oil (D1)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone size-full wp-image-27420" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/Brent-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /><br />
Brent Crude appears to have made a slight recovery towards the 50-day SMA but has not yet broken above it, indicating that the bearish sentiment may be waning, but the trend has not reversed. The RSI is close to the neutral zone, suggesting that market sentiment is neither overly bearish nor bullish. The resistance at 89.0 remains a crucial level to watch for a potential trend change.</p>
<p><strong>S&P 500 Index (D1)</strong></p>
<p><img decoding="async" loading="lazy" class="alignnone size-full wp-image-27423" src="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP500-Canva.png" alt="" width="2556" height="1227" srcset="https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP500-Canva.png 2556w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP500-Canva-300×144.png 300w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP500-Canva-1024×492.png 1024w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP500-Canva-768×369.png 768w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP500-Canva-1536×737.png 1536w, https://www.keytomarkets.com/blog/wp-content/uploads/2023/12/SP500-Canva-2048×983.png 2048w" sizes="(max-width: 2556px) 100vw, 2556px" /><br />
The S&P 500 index is exhibiting continued bullishness, with the price trading well above the 50-day SMA. The RSI has decreased somewhat, suggesting that the index is no longer in the overbought region, which may reduce the likelihood of an immediate pullback. Resistance at 4654 is still an important marker for future price action, with strong support established at 4362.</p>
<p>Thank you very much for reading – and have a great week trading!</p>
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<p>The post <a href="https://www.keytomarkets.com/blog/analysis/the-week-ahead-04th-07th-december-fed-officials-hinted-at-a-dovish-turn-ahead-of-important-labour-market-data-27398/">The Week Ahead 04th – 07th December: Fed officials hinted at a dovish turn ahead of important labour market data</a> appeared first on <a href="https://www.keytomarkets.com/blog">Key To Markets Blog</a>.</p>
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