Market displeased with Fed outlook

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September. The latest weekly close back above the September high at 1.1739 strengthens this prospect. Any setbacks should now be well supported ahead of 1.1100. Next key resistance comes in at 1.2668.

• R2 1.2668– 27 May high – Strong
• R1 1.2447 – 14 December high – Medium
• S1 1.2107 – 7 December low – Medium
• S2 1.1900 – 30 November low – Strong

GBPUSD – fundamental overview

The Pound got a boost as the cost of living crunch in the UK was seen slightly abating. The market now turns its attention to today's BOE event risk. Key standouts on Thursday’s calendar include central bank decisions from the BOE and ECB, and US data in the form of retail sales, the Philly Fed, NY empire manufacturing, initial jobless claims, industrial production, and business inventories.

USDJPY – technical overview

Longer-term technical studies are in the process of unwinding from severe overbought readings. Look for additional corrective price action back down towards the 130.00 area before the market considers the possibility of uptrend resumption. Rallies should now be well capped ahead of 140.00.

• R2 139.90 – 13 December high – Strong
• R1 137.98 – 1 December high – Medium
• S1 133.62 – 2 December low – Medium
• S2 133.00 – Figure – Medium

USDJPY – fundamental overview

The Yen has been gaining a little more momentum as the case for a BOJ policy review builds after the Kuroda retirement in April. Key standouts on Thursday’s calendar include central bank decisions from the BOE and ECB, and US data in the form of retail sales, the Philly Fed, NY empire manufacturing, initial jobless claims, industrial production, and business inventories.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base following the recent surge back above 0.6500. The latest weekly close back above previous support now turned resistance at 0.6682 strengthens the outlook for a bullish structural shift.

• R1 0.6917 – 13 September high – Strong
• R2 0.6894 – 13 December high – Medium
• S1 0.6729 – 12 December low – Medium
• S2 0.6669 – 7 December low – Strong

AUDUSD – fundamental overview

Aussie employment rose by a larger than expected 64k in November. The participation rate rose to 66.8%, which means more people are being pulled into the labor force. The unemployment rate remained at an all-time low of 3.4%. Key standouts on Thursday’s calendar include central bank decisions from the BOE and ECB, and US data in the form of retail sales, the Philly Fed, NY empire manufacturing, initial jobless claims, industrial production, and business inventories.

USDCAD – technical overview

A recent surge back above 1.3000 signals an end to a period of bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3700 – Figure – Medium
• R1 1.3676 – 6 December high – Medium
• S1 1.3381 – 28 November low – Medium
• S2 1.3316 – 24 November low – Strong

USDCAD – fundamental overview

The Canadian Dollar traded poorly on Wednesday despite higher commodities prices and decent local data. Key standouts on Thursday’s calendar include central bank decisions from the BOE and ECB, and US data in the form of retail sales, the Philly Fed, NY empire manufacturing, initial jobless claims, industrial production, and business inventories.

NZDUSD – technical overview

Overall pressure remains on the downside with risk for the current recovery rally to stall out and form a lower top for the next major downside extension. A break back above 0.6577 would be required to take the immediate pressure off the downside.

• R2 0.6577 – 3 June high – Strong
• R1 0.6514 – 13 December high – Medium
• S1 0.6285– 1 December low – Medium
• S2 0.6156 – 28 November low – Strong

NZDUSD – fundamental overview

Better than expected GDP data out of New Zealand has helped to fuel additional demand for the New Zealand Dollar. Key standouts on Thursday’s calendar include central bank decisions from the BOE and ECB, and US data in the form of retail sales, the Philly Fed, NY empire manufacturing, initial jobless claims, industrial production, and business inventories.

US SPX 500 – technical overview

Longer-term technical studies are in the process of unwinding from extended readings off record highs. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4300 will be required at a minimum to take the immediate pressure off the downside. Next major support comes in at 3492.

• R2 4150 – 13 September high – Strong
• R1 4137 – 13 December high – Strong
• S1 3863 – 8 November high – Medium
• S2 3699 – 3 November low – Strong

US SPX 500 – fundamental overview

We've finally reached a point in the cycle where the Fed recognizes unanchored inflation expectations pose a greater downside risk than over-tightening. This is significant, as it means less investor friendly monetary policy that risks potential recession in the months ahead. Overall, we expect inflation to continue to be a problem in Q4 2022 and Q1 2023 that results in downside pressure into rallies.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1600 on a monthly close basis ahead of the next major upside extension. This latest break back above 1808 strengthens the bullish outlook.

• R2 1880 – 13 June high – Strong
• R1 1825 – 13 December high – Medium
• S1 1719 – 23 November low – Medium
• S2 1665 – 8 November low – Medium

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.