Market analysis

Week 51 data: Oil and Gold

By Antreas Themistokleous

18 December 2023

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This preview of weekly data looks at USOIL and XAUUSD, where economic data coming up later this week are the main drivers in the markets for the near-term outlook. The most important economic data for this week are:

Tuesday:

BoJ Interest rate decision at 03:00 AM GMT. The market consensus is that the rates will remain static at -0.1%. In the unlikely scenario of any shift from this figure, there will most certainly be volatility in the yen pairs.

EA Inflation rate at 10:00 AM GMT, where the expectations for the core figure are a drop from 4.2% to 3.6%. If these expectations are confirmed, it might create some minor losses for the Euro against major currencies traded against, like the Dollar and the British pound.

Canadian Inflation rate at 13:30 GMT. The anticipation here is for a decline of around 0.2%, reaching the figure of 2.9%. In the event of these anticipations becoming reality, then the loonie might see some short-term losses against its pairs.

US building permits preliminary data for the month of November at 13:30 GMT. The figure is broadly expected to decline to 1.47 million against the previous reading of 1.498 million. This might affect the future of interest rates since they directly affect the housing market.

Wednesday:

British Inflation rate at 07:00 AM GMT, where the figure for the month of November is expected to drop from 4.6% to 4.4%. If it's confirmed, then the pound might witness some short-term losses against other currencies.

Thursday:

US GDP growth rate for the third quarter at 13:30 GMT. The market consensus is for an increase from 2.1% to 5.2%. This data is considered a lagging indicator since it's for the previous quarter rather than the one currently running, so the data might already be priced in and therefore might not have a significant effect on the greenback.

Japanese inflation rate at 23:30 GMT. The expectation for the month of November is that the rate could go down to 2.6% from the previous 3.3%. This might be somewhat bearish news for market participants trading the yen.

Friday:

US PCE price index at 13:30 GMT. The figure is generally expected to decline by 0.2% for the month of November. Since the Personal Consumption Expenditure (PCE) is the primary measure of consumer spending on goods and services in the U.S., it is one of the main gauges used by the Federal Reserve to assist them in their monetary policy. Therefore, any significant deviation from these expectations could probably spark volatility in the majority of the Dollar pairs.

USOIL, Daily

US shale oil production is surging, defying earlier predictions and challenging OPEC's efforts to control global oil markets. Despite a decrease in drilling rigs, US drillers have increased production through improved efficiency and technological innovations. This unexpected growth is causing concerns for OPEC's strategy of cutting supply to stabilize prices. Private producers, which are harder to forecast, have played a significant role in the increase. However, there are indications that US drillers may exercise more restraint in expanding budgets in the future.

On the technical side, the price has found sufficient support on the lower band of the Bollinger Bands and is currently testing the resistance area of the 20-day moving average. Since the Stochastic Oscillator is at neutral levels, it signifies that the price could move in any direction in the near short term. If the recent correction to the upside continues in the coming sessions, then the first area of possible resistance could be found around the $75 - $76 price level. This area consists of the 61.8% of the weekly Fibonacci retracement level, the 50-day moving average, as well as the upper level of the Bollinger Bands.

Gold-Dollar, Daily

Gold price is edging lower near the $2,020 area mostly due to the rebound of the US Dollar and strong US Services PMI flash data. The Federal Reserve (Fed) has left interest rates unchanged and emphasized its goal to lower inflation. Economic data, such as the preliminary US Building Permits and Housing Starts for November, will probably help determine future interest rate cuts. The US S&P Global Manufacturing PMI flash data for December fell to its lowest level in four months, while the Services PMI exceeded expectations, rising from 50.6 to 51.3 points. The market anticipates a rate cut between 75 - 125 basis points (bps) next year according to the Fedwatch tool, starting at the March meeting. The upcoming US personal consumption expenditures report and GDP.


This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Author:

Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.