Stock Market Edges Higher Ahead Of CPI

U.S. equities climbed in anticipation of the upcoming earnings season, driven by tech giants like Microsoft, Meta, and Nvidia. However, gains were tempered as investors prepared for the release of the U.S. CPI

U.S. equities climbed in anticipation of the upcoming earnings season, driven by tech giants like Microsoft, Meta, and Nvidia. However, gains were tempered as investors prepared for the release of the U.S. Consumer Price Index (CPI) data later today, a pivotal factor for insights into potential Federal Reserve policy adjustments. The dollar index (DXY) saw a modest decline, while gold prices found support above $2020, with a keen eye on crucial inflation metrics. Meanwhile, former Bank of Japan (BoJ) board member comments hinted at an imminent end to Japan’s ultra-loose monetary policy, pointing to April as a potential timeline. In a landmark moment for the crypto market, the long-anticipated approval of the Bitcoin (BTC) Exchange-Traded Fund (ETF) was granted by the U.S. Securities and Exchange Commission (SEC). Despite this breakthrough, BTC prices hover near recent highs as the market digests the SEC’s announcement.

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Current rate hike bets on 31 January Fed interest rate decision: 

Source: CME Fedwatch Tool

0 bps (95%) VS -25 bps (5%)   

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Market Overview

Economic Calendar

Market Movements

DOLLAR_INDX, H4

The Dollar Index remains in a consolidative phase, navigating uncertainties as investors await crucial U.S. inflation data that could sway future interest rate decisions. Despite the long-term trend leaning bearish, a recent better-than-expected jobs report has introduced ambiguity. Market participants anticipate potential interest rate cuts by the Federal Reserve in the range of 150 basis points this year, contingent on the trajectory of inflation.

The Dollar Index is trading lower following the prior retracement from the resistance level. MACD has illustrated increasing bearish momentum, while RSI is at 46, suggesting the index might extend its losses since the RSI stays below the midline. 

Resistance level: 102.60, 103.45

Support level: 101.75, 101.30

XAU/USD, H4

Gold prices exhibit a consolidative trend within a range, influenced by contrasting factors. Upbeat jobs data bolstered the appeal for the U.S. Dollar, exerting downward pressure on dollar-denominated gold. Conversely, bullish sentiments arise from expectations of Fed rate cuts, potentially boosting gold demand in 2024. Economists anticipate a 150-basis points interest rate cut by the Federal Reserve this year, contingent on forthcoming inflation reports. The dual nature of these fundamentals suggests a nuanced outlook, prompting investors to monitor developments for strategic trading decisions.

Gold prices are trading flat while currently near the support level. MACD has illustrated increasing bullish momentum, while RSI is at 48, suggesting the commodity might trade higher since the RSI rebounded sharply from oversold territory. 

Resistance level: 2035.00, 2055.00

Support level: 2020.00,  2000.00

GBP/USD，H4

The GBP/USD pair made gains, encountering resistance near the 1.2765 level. Yesterday’s rebound for the Cable was attributed to a slight moderation in dollar strength, setting the stage for the impending U.S. Consumer Price Index (CPI) data release later today. Market attention also turns to tomorrow’s upcoming UK Gross Domestic Product (GDP) report. Traders eagerly await insights into the UK’s economic conditions, providing a gauge for Sterling’s strength amidst global market dynamics.

The GBP/USD rebounded and remains trading above its upward support level, suggesting the bullish view with the pair remains. The RSI is gaining and approaching the overbought zone while the MACD continues to flow above the zero line, suggesting the pair remain trading with bullish momentum. 

Resistance level: 1.2815, 1.2906

 Support level: 1.728, 1.2631

EUR/USD，H4

The EUR/USD pair sustained its upward trajectory, breaching the 1.0954 resistance level. Investor sentiment shifted as the market awaits the pivotal U.S. Consumer Price Index (CPI) release later today. A slight easing in dollar strength contributed to the notable advance in the EUR/USD pair. Despite the positive momentum for the euro, challenges persist, with recent economic data, including Consumer Price Index (CPI) figures, suggesting potential headwinds for the European Central Bank’s (ECB) ongoing monetary tightening cycle.

The EUR/USD traded in its uptrend trajectory and has broken its near-resistance level, suggesting a bullish bias for the pair. The MACD has broken above the zero line while the RSI continues to climb, suggesting the bullish momentum is gaining. 

Resistance level: 1.1041, 1.1138

Support level: 1.0866, 1.0775

USD/JPY，H4

The USD/JPY pair experienced a temporary respite as the dollar’s strength eased in anticipation of the upcoming U.S. Consumer Price Index (CPI) release. The Japanese Yen’s resilience faces ongoing challenges, fueled by market sentiments suggesting a potential delay in the Bank of Japan’s (BoJ) plan to shift from its ultra-loose monetary policy. Notably, a former BoJ board member asserted that the central bank is prepared to make this transition, emphasising that April could be the opportune moment for the BoJ to implement such a policy shift.

The USD/JPY, uptrend price movement, was held at its near-resistance level of 145.50 level. The RSI remains elevated while the MACD continues to flow above the zero line, suggesting the bullish momentum remains strong.

Resistance level: 146.88, 148.77

 Support level: 143.82, 141.64

AUD/USD, H4

In recent sessions, the AUD/USD pair has maintained a consolidated stance, eagerly anticipating a market catalyst to guide its directional movement. All eyes are on the long-anticipated U.S. Consumer Price Index (CPI) release, expected to act as a potential trigger for the pair to break out of its current consolidation range. In contrast, Australia’s monthly CPI indicator for December posted a lower figure compared to the previous reading, standing at 4.30%. This suggests a potential easing in inflation within the country, impacting the strength of the Australian dollar. On a positive note, the Aussie dollar finds support in an upbeat trade balance, boasting a gain of over 4 billion dollars in November.

The AUD/USD pair has been consolidating after a downtrend move, suggesting a neutral signal for the pair. The RSI has been slowly gaining while the MACD is approaching the zero line from the bottom, suggesting bullish momentum is forming. 

Resistance level: 0.6797, 0.6894

Support level: 0.6617, 0.6510

CL OIL, H4

Oil prices face a decline fueled by bearish inventory data. The Energy Information Administration (EIA) reports a substantial increase in U.S. crude oil inventories, surpassing market expectations of a decline. Despite the bearish data, tensions in the Middle East act as a mitigating factor, limiting the extent of losses in the oil market. The delicate balance between inventory dynamics and geopolitical uncertainties adds complexity to the oil market’s trajectory.

Oil prices are trading flat while currently testing the resistance level. MACD has illustrated diminishing bearish momentum, while RSI is at 46, suggesting the commodity might extend its losses since the RSI stays below the midline. 

Resistance level: 72.70, 78.65Support level: 67.40, 63.70