DBG Markets: Market Report for Nov 28, 2024

Market Overview

The release of US economic data yesterday aligned with expectations, showing a Prelim GDP q/q growth of 2.8%, unemployment figures at 213K, and a Core PCE m/m increase of 0.3%. While these numbers met the Federal Reserve‘s inflation targets, they slightly increased the probability of a December rate cut to 64.7%, up from Tuesday's 59%, according to the CME Group’s FedWatch Tool.

Equities faced modest losses after data revealed solid consumer spending in October, suggesting strong economic growth but stalled progress in inflation reduction. Core inflation, a key metric for Federal Reserve policy, rose 2.8% in the 12 months through October, slightly higher than Septembers 2.7%.

"This wasn‘t earth-shattering news for the markets," noted Peter Cardillo, chief market economist at Spartan Capital Securities. "We all expected inflation to tick up a bit, but it’s not getting out of hand. Thats the key. This sets the stage for a 25-basis point cut in December, followed by a likely pause."

GOLD - Gold has reached the peak of its recent pullback, signaling increasing chances for bearish continuation. The MACD recently crossed into bearish territory, while the RSI shows strong downward momentum. Despite current oversold conditions, the RSI's normalization prompted a small price pullback, consistent with price action that respects bearish momentum.

SILVER - Silver prices continue to signal bearish momentum, as indicated by the MACD and RSI. The market broke through the previous swing low, confirming rejection at the 30.668 level as anticipated. This adds to the likelihood of further downward movement in the short term.

DXY - The dollar exhibits divergence in the RSI as the market pulls back from recent lows, normalizing the indicator. The MACD highlights strong momentum and volume aligned with price action, suggesting continued selling pressure. Expectations for a December rate cut have further strengthened the dollars bearish outlook.

GBPUSD - The pound has rebounded from its recent lows after consolidating over the past few sessions. Contrary to prior bearish price action momentum, USD weakness has supported the pounds recovery. Both the RSI and MACD confirm this bullish movement, reflecting a stronger pound as the market reacts to diminished USD strength.

AUDUSD - The Australian dollar has shown modest recovery, supported by increased expectations of a rate cut exceeding 60%. The RSI indicates bullish momentum, while the MACD reflects rising volume and strength for buying. There is potential for prices to cross above the previous swing high, potentially shifting market momentum to bullish. However, the weaker-than-expected CPI y/y figure of 2.1% has tempered the Aussie dollar‘s rise compared to the pound’s recovery.

NZDUSD - The New Zealand dollar continues its bullish trend, though the RSI indicates oversold conditions following a minor price drop. The MACD, however, shows declining momentum and volume. If price action sustains its upward trajectory, MACD strength may increase. Despite remaining below the previous swing high, the markets overall momentum stays bearish, though upward movement is still plausible.

EURUSD - The euro gains strength amid weaker USD momentum, maintaining a buying trajectory despite a minor and subdued price decline. The RSI indicates oversold conditions, suggesting continued bullish momentum. Similarly, the MACD reflects increased buying strength and momentum, although the lighter histogram prints hint at a slight potential for a short-term pullback. While geopolitical fundamentals do not entirely align with this trend, market focus remains on anticipated Federal Reserve rate cuts, which currently take precedence in driving the euro's movement.

USDJPY - The yen's strength persisted throughout yesterdays trading session, but the RSI indicates a pullback after hitting oversold conditions. Current price action has pushed the RSI into overbought territory, increasing the likelihood of a sell-off. Although the MACD is on the verge of crossing into bullish territory, suggesting a longer pullback may occur, fundamentals support a potential rate hike in December.

USDCHF - The Swiss franc gained ground, leaving a notable gap that may need filling. A market pullback followed RSI divergence and oversold conditions. While the MACD still signals strength, lighter histogram prints suggest a price turnaround before resuming selling. Price action indicates a test of the previous swing low, which will determine whether the market breaks lower or consolidates within its range.

USDCAD - The Canadian dollar experienced a sharp price drop after an initial surge. This movement is supported by the MACD and RSI, both favoring bearish momentum. The sell-off could continue as price action normalizes following a one-candle move that disrupted previous market structures.