Sample Category Title

Daily Pivots: (S1) 0.8817; (P) 0.8836; (R1) 0.8860; More…

Intraday bias in USD/CHF remains on the upside for the moment. Corrective fall from 0.8956 should have completed at 0.8735 after hitting 55 D EMA. Further rally should be seen to retest 0.8956 high first. Firm break there will resume the whole rise from 0.8374. Next target is 61.8% projection of 0.8374 to 0.8956 from 0.8735 at 0.9095. On the downside, below 0.8815 minor support will turn intraday bias neutral first. But risk will stay on the upside as long as 0.8735 support holds, in case of retreat.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with rise from 0.8374 as the third leg. Overall outlook will continue to stay bearish as long as 0.9223 resistance holds. Break of 0.8332 low is in favor at a later stage when the consolidation completes.

European majors are broadly under pressure today, with Swiss Franc leading losses. SNB’s unexpected 50bps rate cut caught markets off guard, and its significantly downgraded inflation projections suggest more easing is on the table for 2025. Meanwhile, Euro managed to hold steady after ECB’s widely anticipated 25bps cut. ECB demonstrated clear confidence in its inflation trajectory. Despite its professed "data-dependent" stance, the path toward a neutral rate now seems well-defined.

In contrast, Australian Dollar is shining as the strongest performer, driven by robust domestic job data that dashed hopes for a February rate cut by RBA The Yen follows closely ahead of BoJ’s closely watched Tankan survey. Kiwi also shows strength, while Dollar and Canadian Dollar trade mixed for the session.

Looking ahead, Yen will likely stay in focus during the Asian session with the Tankan survey results, while UK GDP data tomorrow could impact Sterling’s direction. GBP/JPY stands at an inflection point.

Technically, near term in GBP/JPY outlook was mixed up with the stronger than expected rebound from 188.07. However, break of 192.35 minor support argues that fall from 199.79 is in progress. More importantly, that would also revive the case that while corrective rise from 180.00 has completed at 199.79. Deeper fall should then be seen to 180.00/183.70 support zone.

In Europe, at the time of writing, FTSE is up 0.07%. DAX is up 0.14%. CAC is up 0.17%. UK 10-year yield is up 0.0281 at 4.349. Germany 10-year yield is up 0.024 at 2.156. Earlier in Asia, Nikkei rose 1.21%. Hong Kong HSI rose 1.20%. China Shanghai SSE rose 085%. Singapore Strait Times rose 0.43%. Japan 10-year JGB yield fell -0.0212 to 1.051.

US PPI up 0.4% mom, 3.0% yoy, highest annual rise since Feb 2023

US PPI for final demand rose 0.4% mom in November, above expectation of 0.3% mom. Nearly 60% of the broad-based rise in final demand prices can be attributed to a 0.7% mom increase in goods. Prices for final services moved up 0.2% mom. PPI less foods, energy, and trade services inched up 0.1% mom.

On an unadjusted basis, PPI advanced 3.0% yoy for the 12 months period, well above expectation of 2.5% yoy. It's also the largest rise since moving up 4.7% yoy in February 2023. PPI less foods, energy, and trade services advanced 3.5% yoy.

US initial jobless claims rise to 242k, above exp 221k

US initial jobless claims rose 17k to 242k in the week ending December 7, above expectation of 221k. Four-week moving average of initial claims rose 6k to 224k.

Continuing claims rose 15k to 1886k in the week ending November 30. Four-week moving average of continuing claims rose 3.5k to 188k, highest sine November 27, 2021.

ECB cuts to 3.00%, projects inflation steady around target through 2027

ECB cut its deposit rate by 25bps to 3.00%, aligning with market expectations. The overall decisions and economic projections reflect confidence in the ongoing disinflation process. Yet, he Governing Council reiterated its "data-dependent and meeting-by-meeting approach," refraining from pre-committing to any specific rate path.

In its statement, the ECB highlighted that the "disinflation process is well on track." The bank's updated projections show headline inflation averaging 2.4% in 2024, moderating further to 2.1% in 2025 and 1.9% in 2026.

Inflation excluding energy and food is expected to average 2.9% in 2024, easing to 2.3% in 2025 and stabilizing at 1.9% by 2026 and 2027.

ECB added that inflation is projected to settle around its 2% target "on a sustained basis."

However, growth expectations were revised downward, reflecting continued economic challenges. ECB now forecasts the Eurozone economy to expand by just 0.7% in 2024, improving modestly to 1.1% in 2025 and 1.4% in 2026.

Growth is expected to rest primarily on rising real incomes, which should bolster household consumption, alongside gradual increases in business investment. Additionally, ECB noted that the fading effects of restrictive monetary policy should support a recovery in domestic demand over time.

Ifo flags structural risks as German economy faces subdued 0.4% growth next year

Germany's economy is forecast to contract by -0.1% in 2024, according to the Ifo Institute. The economy has been "treading water for five years", with growth stalled amid structural challenges.

The institute presents two possible trajectories for 2025: sluggish growth of just 0.4% if structural issues persist, or a recovery to 1.1% if economic policy reforms support industrial revival.

Timo Wollmershäuser, Head of Forecasts at Ifo, stated, “It is not yet clear whether the current phase of stagnation is a temporary weakness or one that is permanent and hence a painful change in the economy.”

He noted that Germany's export sector, once a key driver of growth, has become "increasingly decoupled from global economic development," with competitiveness eroding, particularly in industrial goods outside Europe.

In a pessimistic scenario, this weakness could lead to "creeping deindustrialization," while an optimistic outcome would depend on supportive policies enabling manufacturing to expand production capacities. Such measures could, in turn, boost private consumption and reduce the high savings rate, providing further stimulus to the economy.

SNB cuts by 50bps, projects weaker inflation and modest growth in 2025

SNB took a decisive step by lowering its policy rate by 50 basis points to 0.50%. In its accompanying statement, the central bank highlighted that underlying inflationary pressures have "decreased again" this quarter, warranting the larger-than-expected rate cut. SNB reiterated its commitment to "monitor the situation closely" and stated that it would "adjust its monetary policy if necessary."

The latest conditional inflation forecasts reflect a significantly subdued outlook, even with interest rate down from 1.00% to 0.50%.

For 2025, inflation is now projected at just 0.3%, a notable downgrade from the 0.6% forecast in September. However, the 2026 outlook saw a slight upward revision to 0.8%, from 0.7% previously.

Looking at some details, inflation is expected to decline sharply from 0.7% in Q4 2024 to a low of 0.2% in Q2 2025, before gradually recovering to 0.8% in 2026 and 0.7% in 2027. These figures underscore the SNB’s view of persistent deflationary risks, necessitating its proactive policy stance.

In terms of economic growth, SNB estimates GDP growth for 2024 to come in at around 1%, with a modest pickup to 1-1.5% expected in 2025. Despite this improvement, challenges remain, including slightly rising unemployment and declining utilization of production capacity.

Australia’s employment data beats expectations, unemployment drops below to 3.9%

Australia’s labor market showed surprising resilience in November as employment grew by 35.6k, surpassing expectations of a 29.6k increase. The standout figure was the 52.6k gain in full-time jobs, offsetting a decline of -17k in part-time positions.

Unemployment rate fell significantly, dropping from 4.1% to 3.9%, well below the anticipated 4.2%. However, a slight dip in the participation rate, from a record high of 67.1% to 67.0%, tempered the optimism.

Employment-to-population ratio nudged up to 64.4%, matching levels from a year ago and maintaining its position 2.2% above pre-pandemic levels. Monthly hours worked showed no growth, indicating stability in workforce activity despite the overall gains in employment.

David Taylor, Head of Labour Statistics at the ABS, noted that an unusually high number of unemployed individuals transitioned into employment during November. This dynamic contributed to both the rise in job creation and the sharp fall in unemployment. Taylor also highlighted the role of population growth, which has bolstered labor supply and helped maintain the balance between employment growth and demographic expansion.

USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.8817; (P) 0.8836; (R1) 0.8860; More…

Intraday bias in USD/CHF remains on the upside for the moment. Corrective fall from 0.8956 should have completed at 0.8735 after hitting 55 D EMA. Further rally should be seen to retest 0.8956 high first. Firm break there will resume the whole rise from 0.8374. Next target is 61.8% projection of 0.8374 to 0.8956 from 0.8735 at 0.9095. On the downside, below 0.8815 minor support will turn intraday bias neutral first. But risk will stay on the upside as long as 0.8735 support holds, in case of retreat.

In the bigger picture, price actions from 0.8332 (2023 low) are currently seen as a medium term corrective pattern, with rise from 0.8374 as the third leg. Overall outlook will continue to stay bearish as long as 0.9223 resistance holds. Break of 0.8332 low is in favor at a later stage when the consolidation completes.

US PPI for final demand rose 0.4% mom in November, above expectation of 0.3% mom. Nearly 60% of the broad-based rise in final demand prices can be attributed to a 0.7% mom increase in goods. Prices for final services moved up 0.2% mom. PPI less foods, energy, and trade services inched up 0.1% mom.

On an unadjusted basis, PPI advanced 3.0% yoy for the 12 months period, well above expectation of 2.5% yoy. It's also the largest rise since moving up 4.7% yoy in February 2023. PPI less foods, energy, and trade services advanced 3.5% yoy.

Full US PPI release here.

US initial jobless claims rose 17k to 242k in the week ending December 7, above expectation of 221k. Four-week moving average of initial claims rose 6k to 224k.

Continuing claims rose 15k to 1886k in the week ending November 30. Four-week moving average of continuing claims rose 3.5k to 188k, highest sine November 27, 2021.

Full US jobless claims release here.

ECB cut its deposit rate by 25bps to 3.00%, aligning with market expectations. The overall decisions and economic projections reflect confidence in the ongoing disinflation process. Yet, he Governing Council reiterated its "data-dependent and meeting-by-meeting approach," refraining from pre-committing to any specific rate path.

In its statement, the ECB highlighted that the "disinflation process is well on track." The bank's updated projections show headline inflation averaging 2.4% in 2024, moderating further to 2.1% in 2025 and 1.9% in 2026.

Inflation excluding energy and food is expected to average 2.9% in 2024, easing to 2.3% in 2025 and stabilizing at 1.9% by 2026 and 2027.

ECB added that inflation is projected to settle around its 2% target "on a sustained basis."

However, growth expectations were revised downward, reflecting continued economic challenges. ECB now forecasts the Eurozone economy to expand by just 0.7% in 2024, improving modestly to 1.1% in 2025 and 1.4% in 2026.

Growth is expected to rest primarily on rising real incomes, which should bolster household consumption, alongside gradual increases in business investment. Additionally, ECB noted that the fading effects of restrictive monetary policy should support a recovery in domestic demand over time.

Full ECB statement here.

12 December 2024

The Governing Council today decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which the Governing Council steers the monetary policy stance – is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.

The disinflation process is well on track. Staff see headline inflation averaging 2.4% in 2024, 2.1% in 2025, 1.9% in 2026 and 2.1% in 2027 when the expanded EU Emissions Trading System becomes operational. For inflation excluding energy and food, staff project an average of 2.9% in 2024, 2.3% in 2025 and 1.9% in both 2026 and 2027.

Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis. Domestic inflation has edged down but remains high, mostly because wages and prices in certain sectors are still adjusting to the past inflation surge with a substantial delay.

Financing conditions are easing, as the Governing Council’s recent interest rate cuts gradually make new borrowing less expensive for firms and households. But they continue to be tight because monetary policy remains restrictive and past interest rate hikes are still transmitting to the outstanding stock of credit.

Staff now expect a slower economic recovery than in the September projections. Although growth picked up in the third quarter of this year, survey indicators suggest it has slowed in the current quarter. Staff see the economy growing by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026 and 1.3% in 2027. The projected recovery rests mainly on rising real incomes – which should allow households to consume more – and firms increasing investment. Over time, the gradually fading effects of restrictive monetary policy should support a pick-up in domestic demand.

The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

Key ECB interest rates

The Governing Council today decided to lower the three key ECB interest rates by 25 basis points. Accordingly, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 3.00%, 3.15% and 3.40% respectively, with effect from 18 December 2024.

Asset purchase programme (APP) and pandemic emergency purchase programme (PEPP)

The APP portfolio is declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.

The Eurosystem no longer reinvests all of the principal payments from maturing securities purchased under the PEPP, reducing the PEPP portfolio by €7.5 billion per month on average. The Governing Council will discontinue reinvestments under the PEPP at the end of 2024.

Refinancing operations

Banks will repay the remaining amounts borrowed under the targeted longer-term refinancing operations this month, which concludes this part of the balance sheet normalisation process.

***

The Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises sustainably at its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission. Moreover, the Transmission Protection Instrument is available to counter unwarranted, disorderly market dynamics that pose a serious threat to the transmission of monetary policy across all euro area countries, thus allowing the Governing Council to more effectively deliver on its price stability mandate.

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:45 CET today.

The EUR/USD pair declined to 1.0504 on Thursday, influenced by investor reactions to the latest US inflation data. The November US Consumer Price Index (CPI) showed a rise of 0.3% month-over-month, aligning with forecasts but indicating a slight acceleration from the previous 0.2% increase. This recent uptick has adjusted market expectations significantly, reducing hopes for a substantial interest rate cut by the Federal Reserve in the upcoming meeting. According to CME Watch, the likelihood of a 25-basis-point cut is now pegged at 94%.

US inflation stands at 2.7% year-on-year, slightly up from 2.6%, suggesting persistent inflationary pressures despite elevated interest rates. This scenario indicates that consumers remain active, which could complicate the Federal Reserve’s monetary policy strategy.

Meanwhile, the political situation in France has been factored into the EUR/USD rates, though some underlying tensions persist.

Attention now turns to the European Central Bank (ECB), whose interest rate is 3.4%. Market participants are keenly awaiting whether the ECB will adjust rates in its upcoming meeting.

Technical analysis of EUR/USD

H4 chart: the EUR/USD has recently completed a decline to the level of 1.0479 and appears poised to continue this downward trend towards 1.0470. Following this, a corrective move to 1.0535 is anticipated, and once this is complete, another decline to 1.0444 could follow. This bearish outlook is supported by the MACD indicator, with its signal line positioned below zero and trending downwards, indicating continued selling pressure.

H1 chart: the pair is developing a downward structure towards 1.0470, currently consolidating around 1.0505. A breakout below this level could lead to reaching the target level of 1.0470. Subsequently, a rebound to 1.0535 might occur, followed by a further decline to 1.0444. This scenario is supported by the Stochastic Oscillator, with its signal line above 80 but poised to drop towards 20, suggesting a potential shift from overbought conditions to lower levels.

USDCHF rose to two-week high on 0.8% jump on Thursday morning, after the Swiss National Bank surprised by 50 basis points rate cut (0.50% from 1%) against widely expected 25 basis points cut.

This was the fourth policy easing in 2024, following three 0.25% cuts in March, June and September, and the biggest rate reduction in nearly a decade.

The SNB said it will continue to monitor the situation and act accordingly in order to maintain price stability and inflation within the central bank’s0%-2% range (November inflation was 0.7%).

Fresh post-SNB acceleration extended recovery leg from 0.8725 (Dec 6 higher low) into fifth straight day and broke above Fibo 61.8% retracement of 0.8957/0.8725 pullback, also denting the lower platform at 0.8890 zone.

Sustained break above these levels is needed to validate fresh bullish signal and open way for full retracement of 0.8957/0.8725 bear-leg.

Technical studies on daily chart are still mixed as 14-d momentum dips further in the negative territory, conflicting MA’s in bullish configuration and formation of 10/200 DMA golden cross.

Near-term bias is expected to remain with bulls while the price stays above broken Fibo 50% level at 0.8841, reinforced by 20DMA, which reverted to support.

Caution on loss of 200DMA pivot (0.8824) which would signal recovery stall and shift near-term focus to the downside.

Res: 0.8869; 0.8893; 0.8902; 0.8917.
Sup: 0.8841; 0.8824; 0.8814; 0.8780.

Market Picture

Crypto market capitalisation jumped 5% in 24 hours to $3.64 trillion. Optimism in the US stock market pushed Bitcoin above $100K, bringing buyers back into altcoins. The Cryptocurrency Sentiment Index returned to extreme greed territory at 83.

Bitcoin climbed just above $101.5K, meeting solid resistance for the past seven days. Current levels are above the psychologically important round level and the consolidation area of the last three weeks. It may be risky to talk about a breakout to new highs and a complete eradication of bearish sentiment. A confirmation of buying strength could see a quick rally into the $120,000 area.

Ethereum rose 7% on the day to $3900, doubling bitcoin’s performance. However, this is a rally and not a breakout to new highs, which makes the path easier. It will be interesting to watch the price action as it enters the $4100 area. From this level, there are roughly equal chances of a sharp reversal to the downside and a break of resistance with a flight to the $5000 area.

News Background

Ray Dalio, founder of Bridgewater Associates, said he would invest in the first cryptocurrency amid the inevitable debt crisis and the coming fall of fiat currencies. He urged people to ‘stay away from leveraged assets like bonds and own hard money like gold and bitcoin’.

According to options protocol Derive, Ethereum’s chances of hitting $5,000 in December have fallen below 10%. However, according to EthHub founder Eric Conner, a ‘supply crisis’ is looming for the coin. Ethereum ETFs attracted more than $305 million on 10 December alone.

Circle and the Binance exchange have entered a strategic partnership to expand the USDC stablecoin’s global presence. The exchange will also list the ‘stablecoin’ as an asset in its corporate treasury.

On 11th December, shares of the Japanese exchange Coincheck began trading on the Nasdaq, becoming the second crypto exchange on the US stock market after Coinbase.

According to K33 Research, the volume of liquidations in altcoins ($1.75bn) on 10 December was the largest since 19 May 2021, while the cryptocurrency market ($12.8bn) hit a record high. This signals a reduction in excessive leverage and sets the stage for more sustainable growth.

The XAU/USD chart shows:

→ A notable peak in November near the $2716 level (indicated by the first arrow);

→ Yesterday, gold surpassed this peak, reaching a new one-month high.

Factors Supporting Bullish Sentiment

→ Yesterday’s US Consumer Price Index data met analysts’ expectations. This bolstered market speculation about a Federal Reserve interest rate cut in December, enhancing the appeal of non-yielding assets like gold.

→ Geopolitical tensions in Eastern Europe and the Middle East, along with uncertainty surrounding the policy direction and tariff plans of newly elected US President Donald Trump, are contributing to gold’s safe-haven appeal.

Technical Analysis of XAU/USD

Gold prices have been rising since August within a channel, with the lower boundary marked as Support 1. However, in November, Support 2—a line with a gentler slope—gained relevance, potentially signalling waning demand strength.

If buyers are indeed losing momentum, a price reversal from the fresh high could occur. This would suggest a false bullish breakout above the mid-November peak near $2715. Early trading action on the XAU/USD chart this morning lends weight to this potential scenario.

Start trading commodity CFDs with tight spreads. Open your trading account now or learn more about trading commodity CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.