Weekly data: Oil and Gold

The most important economic data for this week are: 

Tuesday:  

• BoJ Interest rate decision at 03:00 AM GMT. The market consensus is that the rates will remain static at -0.1%, while in the unlikely scenario any shift away from this figure will most certainly create volatility in the yen pairs. 
• Japanese Balance of trade at 11:50 PM GMT, where the expectations are for a decline in the trade deficit from ¥-776.9bn to ¥-122.1bn for December. If the expectations are correct, then the yen could face some support against the currencies traded against it.  

 Wednesday: 

•  The Bank of Canada’s Interest rate decision at 15:00 GMT is expected to remain stable at 5%. In case of a surprise hike in the interest rates it would support the loonie in the short term, while in the unlikely event of a rate cut, then it might create some turmoil for the currency. 

 Thursday: 

• European Central Bank Interest rate decision at 13:15 PM GMT. The market consensus is that the central bank of Europe will keep interest rates stable at 4.5% at their meeting on the 25th. If there is a surprise rate hike, then the Euro might find support against other major currencies, while a cut might create some losses in the short term. Investors and traders are rather focused on the subsequent press conference following the release, which will focus on getting hints on the monetary policy steps ahead.  
•  US GDP growth for the fourth quarter of 2023 is expected to decline to 2% against the previous figure of 4.9%. If these rather pessimistic expectations are met, it might create some minor losses for the Dollar while supporting many of its instruments traded against it.  

Friday: 

• The US core PCE price index for December is expected to increase to 0.2% against the previous 0.1%. If these figures are broadly accurate, it might create some support for the Dollar, whereas, in the event of a more soft PCE reading, the Dollar might weaken.  

US OIL, daily 

Growth outlooks in China and Europe continue to weigh on crude oil prices as geopolitical tensions and recent attacks on oil facilities in Russia. The disruption of global trade has tightened crude markets and led to a perception of tighter supply for prompt delivery, reflected in the widening premium of the first-month Brent contract to the six-month contract. This week’s important data affecting the US Dollar, the core PCE specifically, is expected to show how the greenback could be affected in the short term and the instruments traded against it. The Federal Reserve is closely monitoring the PCE readings and is one of the main gauges of the economy in their action plan regarding monetary policy.  

On the technical side, the price is trading at a rather significant area on the chart since it is the support level of the 50-day moving average and just below the 23.6% of the daily Fibonacci retracement level. The triangle formation that has been in effect since early December of last year seems to be coming to an end and it is important to monitor any potential breakout in the near short-term outlook. The area of $74 proved to be sufficient resistance to the price more than four times in the recent sessions, so it is likely to see another rejection in the coming days and possibly the price moving downwards. If this becomes reality, then the first area of possible support might be found around the $70 price area which consists of the psychological support of the round number and the lower boundary of the triangle formation.  

Gold-dollar, daily 

The decline in gold prices on Monday was attributed to fading hopes of the Federal Reserve’s March interest rate cut, leading to a 0.4% drop in spot gold prices. The market is now adjusting its optimism about rate cuts, with a 48% chance of a rate cut in March, according to the CME Fed Watch Tool. This is down from an almost 77% chance last week and is a strong indication of the probability of a softer stance by the Federal Reserve, at least for the time being. The decline in gold prices was also influenced by a 1% fall last week and a decrease in the US dollar index. 

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From a technical point of view, the price of gold is currently trading within the dynamic support area between the 50- and the 100-day moving averages. The psychological support level of $2,020 has proven to hold strong recently, which is also 38.2% of the daily Fibonacci retracement level. The stochastic oscillator does not record any overbought or oversold levels, indicating that the price can move in either direction in the short term. If the $2,020 proves to hold strong once again and pushes the price to the upside, then the first area of possible resistance might be seen around the $2,060, which consists of the area just below the 23.6% of the daily Fibonacci retracement and is also the psychological resistance of the round number. 

DISCLAIMER: The opinions in this article are personal to the writer and do not reflect those of Exness or Leap Rate.