Fed’s December meeting minutes due out later on today

The Fed’s December meeting minutes are due out later on today.  In the event that the minutes are indicative of doubts on behalf of Fed officials in regards to extensive rate cuts, we could see the greenback gaining, as it may reduce the market’s current expectations of 6 rate cuts by the Fed this year. However, should it indicate, that policymakers may be on board with extensive rate cuts, it could weaken the dollar. Over in Europe, we note the release of Germany’s, France’s and the Eurozone’s Manufacturing PMI figures for December, which all came in better than expected, implying a narrowing contraction in the Euro area’s manufacturing activity. Yet the difference could be seen as minimal and as such, it appears that its positive implications for the common currency may not have materialized. Tensions, in the Red Sea appear to be rising with Reuter’s reporting that the Houthi rebels fired two anti-ship ballistic missiles into the Southern Red Sea on Tuesday. The continuing tensions in one of the world’s most vital oil arteries could lead to higher oil prices as the safety of the oil supply chain appears to be increasing. In the UK, the Manufacturing PMI figure for December, came in lower than expected, implying a widening contraction in the manufacturing sector, which may have weakened the pound, as concerns about the country’s economic resilience appear to be on the rise.

XAU/USD appeared to move lower yesterday. We switch our bullish outlook, in favour for a sideways bias, following the precious metal having currently breached our upwards-moving trendline which was incepted on the 18^th of December in 2023. Moreover, we note that the RSI indicator dropped below the figure of 60, implying that the bullish momentum may be waning. For our sideways bias to continue, we would like to see the precious metal remain confined between the 2045 (S1) support level and the 2088 (R1) resistance line. On the other hand, for a bearish outlook, we would like to see a clear break below the 2045 (S1) support level, with the next possible target for the bears being the 2005 (S2) support line. Lastly, for a bullish outlook, we would like to see a clear break above the 2088 (R1) resistance level, with the next possible target for the bulls being the 2137 (R2) resistance ceiling.

US100Cash appears to be moving in a downward fashion, after breaking below support turned resistance at the 16580 (R1) resistance line. We maintain a bearish outlook for the index and supporting our case is the indexes break below our upwards-moving trendline which was incepted on the 26^th of October in 2023. For our bearish outlook to continue, we would like to see a clear break below the 16000 (S1) support level, with the next possible target for the bears being the 15200 (S2) support base. On the other hand, for a sideways bias would like to see the index remain confined between the 16000 (S1) support level and the 16580 (R1) resistance line. Lastly, for a bullish outlook, we would require a clear break above the 16580 (R1) and the 17380 (R2) resistance levels, with the next possible target for the bulls being the 18200 (R3) resistance ceiling.

Other highlights for the day:

Today we note the release of Turkey’s CPI rates for December in the European session, while in the American session, we note the release from the US of the ISM manufacturing PMI figure for December and November’s JOLTS job opening figure, while on the monetary front we note that Richmond Fed President Barkin speaks, and we highlight the release of the Fed’s December meeting minutes. Oil traders on the other hand may be more interested in the release of the weekly API crude oil inventories figure. During tomorrow’s Asian session, we get Australia’s Composite PMI figure, Japan’s Manufacturing PMI figure and China’s Caixin services PMI figure all being for the month of December.  

XAU/USD Daily Chart

Support: 2045 (S1), 2005 (S2), 1972 (S3)

Resistance: 2088 (R1), 2137 (R2), 2180 (R3)

US100Cash Daily Chart

Support: 16000 (S1), 15200  (S2), 14390 (S3)

Resistance: 16580 (R1), 17380 (R2), 18200 (R3)

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