With 2023 drawing to a close, holiday cheer isn’t the only thing filling the air for Forex traders. The Western holiday season, centered around Christmas and New Year, can significantly impact market schedules and behavior. While December and January offer exciting trading opportunities, navigating low liquidity and volatility periods is crucial.
Global political events and oil prices remain tightly intertwined. BoJ no-hike disappoints hawks, oil correction continues. Canadian inflation heats up, CAD strengthens. Technical setups offer potential trading opportunities.
The Canadian dollar (CAD) is hovering near its four-month peak against the US dollar, buoyed by rising oil prices and bets on potential interest rate cuts in 2024. However, the upcoming Canadian Consumer Price Index (CPI) report on December 20th could throw a wrench in the works.
The Bank of Japan (BoJ) kept key rates unchanged today, but signaled a possible shift in policy by adopting a flexible upper bound for long-term rates. This reflects their revised inflation outlook, expecting it to top 2% in 2023 and 2024.
Heading into the final week of 2023, the US Dollar remains under pressure. The Fed’s hint at rate cuts next year confirmed market expectations, leading to heavy selling of USD. Further data weakness, especially inflation-related, could push rate cut expectations forward and weigh on the dollar. Conversely, stronger data could delay rate cuts and support USD in the near term. Key data points this week include unemployment claims, Q3 GDP, core PCE, and consumer sentiment. A weaker-than-expected core PCE could keep the pressure on USD. Technically, DXY is approaching a key support zone near 101.22. A break below could lead to further declines towards 99.06.
After a rough 2022, the Nasdaq 100 roared back in 2023, climbing from around 11,000 points to near its 2021 peak of 16,764 by December. Technical indicators like the Alligator and 200-day SMA confirmed this strong upward trend.
Markets face a crucial week before the festive break, with top-tier data releases taking center stage despite thinning liquidity. US GDP, jobless claims, Philly Fed Manufacturing Index, and Canadian retail sales all due throughout the week. UK retail sales data on Friday offers another peek into consumer spending.
After signaling more 2024 cuts than initially anticipated, the NAS100 experienced a rally, propelled by the Federal Reserve’s unexpected dovish tone, leading the Dow to reach an all-time high.
Dollar Demolished: The U.S. dollar (DXY) plunged below 102.00 on Thursday, its lowest since August, driven by a dovish surprise from the Fed. Rate cut talk in 2024 and 2025, exceeding September’s projections, sent Treasury yields tumbling and sparked a dollar selloff.
Here are the Top Market Analysis for the 14th of December, 2023.
