Daily Analysis 09/12/2024

• GBP/USD Price: The pair begins the week on a quiet note, trading in a tight range near 1.2730 during Monday’s early European session. Lack of significant catalysts has left the pair directionless for now.
• Technical POV: The 200-day Simple Moving Average (SMA), currently near 1.2820, continues to act as a strong resistance level. The inability to break above this technical barrier has invited selling pressure, keeping gains in check.
• US Nonfarm Payrolls: The US economy added 227,000 jobs in November, surpassing the market forecast of 200,000. This robust performance underscores the strength of the US labor market, supporting the US Dollar and weighing on GBP/USD.
• US Consumer Sentiment: The preliminary US Consumer Sentiment Index for December rose to 74, beating both the previous reading of 71.8 and the expected 73. This positive surprise reflects resilience in consumer confidence, boosting USD demand.
• US CPI Data: Market participants are eagerly awaiting the release of the US Consumer Price Index (CPI) on Wednesday. The data is expected to provide crucial insights into the Fed's monetary policy trajectory and influence market sentiment.

Closing statement: GBP/USD remains under pressure as technical resistance and strong US data favor the Dollar. The pair's near-term direction hinges on upcoming US CPI data, which will likely shape expectations for the Federal Reserve’s December policy meeting.

• Gold Technicals: On Friday, gold price (XAU/USD) briefly breached the 21-day Simple Moving Average (SMA) at $2,630 but closed above it, signaling resilience. This level remains a critical short-term support for the precious metal as the week begins.
• Geopolitical Developments: News of Syrian rebels seizing Damascus and ousting President Bashar al-Assad marks the end of a 13-year civil war, but broader Middle Eastern risks persist. Despite the Israel-Hezbollah ceasefire, geopolitical uncertainty continues to underpin demand for safe-haven assets like gold.
• US Rate Cut: Despite November’s Nonfarm Payrolls (NFP) outperformance, with a significant headline number, markets now price in an over 80% likelihood of a Federal Reserve rate cut this month. Lower interest rates could weaken the US Dollar and enhance Gold's appeal.
• China Stimulus: Weak inflation data from China has fueled expectations of additional economic stimulus. As the world’s largest consumer of gold, any boost to Chinese demand could provide further upside for XAU/USD.
• Middle Eastern Risks: While the Syrian conflict's resolution may reduce regional tensions, continued instability across the Middle East and potential global repercussions are likely to maintain gold's attractiveness as a safe-haven investment.

Closing statement: Gold’s price remains well-supported by geopolitical risks, expectations of a Fed rate cut, and potential Chinese stimulus. The $2,630 level serves as a key pivot point, with the broader sentiment leaning bullish if geopolitical and monetary policy developments favor safe-haven demand.

• WTI Price: West Texas Intermediate (WTI) prices attracted buying interest below the $67.00 level to start the week. This indicates solid support amid ongoing global supply and demand uncertainties.
• OPEC+ Supply: OPEC+ postponed planned production increases to April 2025 and extended the unwinding of cuts through 2026. This signals cautious supply management amidst concerns over a potential oversupply and fragile global demand.
• Geopolitical Risks: The worsening Russia-Ukraine conflict and the overthrow of Syrian President Bashar al-Assad by rebels maintain the geopolitical risk premium. These developments support Crude Oil prices despite other bearish signals.
• China Demand: Saudi Arabia's decision to lower prices for Asian buyers highlights apprehensions about weakening demand from China, the world's largest crude importer. Slower Chinese demand could cap upside momentum in oil prices.
• US Rig Count: Baker Hughes data revealed a rise in active US oil and gas rigs to the highest level since mid-September, suggesting robust domestic production. This could temper potential price gains from supply constraints elsewhere.

Closing statement: WTI Crude Oil prices are navigating mixed signals, with geopolitical risks and OPEC+ actions offering support while China’s demand concerns and rising US production create headwinds. Near-term direction will likely hinge on developments in global demand and supply adjustments.

• Record High: The DAX advanced by 0.13% on Friday, reaching a record high of 20,426 and extending its winning streak to seven consecutive sessions. This demonstrates strong market momentum amid improving investor sentiment.
• Auto Sector: Auto stocks outperformed, with BMW surging 2.71% and Volkswagen rising 1.17%. Positive performances by Mercedes Benz Group and Porsche further supported the index, reflecting optimism over consumer demand and industrial strength.
• World News: Investor sentiment was bolstered by rising expectations for Beijing's economic stimulus measures and a potential December rate cut by the US Federal Reserve. These factors outweighed the risks of French political uncertainty, which had minimal impact on the DAX.
• Industrial Production: German industrial production fell by 1.0% in October, following a 2.0% decline in September. This continued contraction highlights ongoing challenges within Germany’s industrial sector, raising concerns about broader economic performance.
• Inflation Data: Looking ahead, US consumer inflation expectations and Wednesday’s CPI report are critical factors. Expectations of inflation increasing from 2.9% to 3.0% could influence global risk sentiment and the Fed’s policy decisions.

Closing statement: The DAX maintains strong upward momentum, driven by robust investor confidence and sectoral gains, despite weak industrial data. Key inflation reports and monetary policy developments will shape near-term trends.