US CPI rates due out today

The US CPI rates are set to be released during today’s American session. Specifically, we would like to point towards the headline rate and the core rate both on a year-on-year level for the month of November. The headline rate is expected by economists to accelerate from 2.6% to 2.7% whereas the core rate is expected to remain steady at 3.3%. Thus, should the CPI rates come in as expected or even higher, it may imply persistent inflationary pressures in the US economy. Moreover, with the Fed is currently in its blackout period, before their next meeting next week on the 17 of December, with the interest rate decision due out when the meeting ends on the 18 of December. Hence, with the Fed’s interest rate decision next week, the results of the US CPI rates may be amplified by markets participants. In our view, we would not be surprised to see the CPI rates come in as expected or higher, which in turn could provide the Fed with the justification should they wish to remain on hold. On the flip side, should the CPI rates fail to meet expectations, it may increase pressure on the Fed to cut rates which in turn could weigh on the greenback. Over in the US Equities market, we applaud Google’s (#GOOG) announcement yesterday in which they unveiled their quantum computing chip nicknamed “Willow”. Willow is a leap forward in quantum computer, with Google stating that Willow performed a standard benchmark computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion years. The announcement appears to have already aided the company’s stock price and we would not be surprised if it continues to do so.

EUR/USD appears to be moving in a relatively sideways fashion. We opt for a sideways bias for the pair, yet the RSI indicator below our chart which currently registers a figure of 40, implying a bearish market sentiment. Nonetheless, for our sideways bias to continue, we would require the pair to remain confined between the 1.0475 (S1) support level and the 1.0650 (R1) resistance line. Yet, we would switch our sideways bias in favour of a bearish outlook in the event of a clear break below the 1.0475 (S1) support level, with the next possible target for the bears being the 1.0330 (S2) support line. Lastly, for a bullish outlook we would require a clear break above the 1.0650 (R1) resistance level, with the next possible target for the bulls being the 1.0800 (R2) resistance line.

The S&P500 appears to be moving in a relatively sideways fashion. We opt for a sideways bias for the index and supporting our case is the index’s failure to break above the 6100 (R1) resistance line and the failure to break below the 6030 (S1) support level, in addition to breaking below our upwards moving trendline which was incepted on the 4 of November. For our sideways bias to continue we would require the index to remain confined between the aforementioned S1 and R1 levels. Yet we must stress that our sideways moving channel is extremely narrow and thus we would opt for a bullish outlook in the event of a break above the 6100 (R1) resistance line with the next possible target for the bulls being the 6250 (R2) resistance line. The same goes for a bearish outlook, which we would opt for in the event of a break below the 6030 (S1) support line with the next possible target for the bears being the 5885 (S2) support level.

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Today, we note the release of the US CPI rates for November being of the most widely anticipated financial releases of the week and later on today we get the EIA weekly crude oil inventories figure. In tomorrow’s Asian session we would like to note the release of Australia’s employment data for November. On a monetary level, we note the BoC’s interest rate decision.