Market Drivers – US Session, Dec. 22

Mohamed Abdelhamid 23 December, 2023 2:20 am Forex Market, Global Stock Market, Market Update

The Dow Jones reached all-time highs, while US Treasury yields moved lower. The 10-year settlement was around 3.90%, the lowest since July.

The US Dollar Index fell for the second week in a row, falling to monthly lows below 102.00. Market repricing expectations from the Fed in 2024 keep the Greenback under pressure.

Financial markets are expecting a holiday-shortened trading week and a relatively light economic calendar in the last days of 2023 as limited price action is expected while encouraging false breakouts. Most trading platforms won’t be functional on Monday.

Data from the US next week includes home prices, Jobless Claims, and the Chicago PMI.

Economic Data

The Core Personal Consumption Expenditure (Core PCE) rose 0.2% in November, below the expected 0.3% and 3.2% from a year ago.

Personal Consumption Expenditures (PCE) were released, showing a rise in Core PCE from 3.4% to 3.2%, while Yearly Headline PCE headed lower from 2.9% to 2.6%. Durable Goods Orders for November rose to 5.4%, and Personal Income increased from 0.3% to 0.4%. Personal Spending will tick up, with revised numbers at 0.2% and 0.1%.

The University of Michigan Consumer Sentiment Index increased from 69.4 to 69.7, with inflation expectations rising from 2.8% to 2.9%, still below 3% and Asian markets closed near flat, except for the Hang Seng index, which closed down over 1.6% after the Chinese government released new measures to crack down on the gaming industry.

Key Developments

The EUR/USD rose above 1.1000, and Spain’s preliminary Consumer Price Index (CPI) for December will be crucial. The GBP/USD posted modest weekly gains, facing difficulty holding above 1.2700.

The Japanese Yen was the worst performer among majors during the week, following the Bank of Japan (BoJ) monetary policy meeting. USD/JPY posted minor gains but finished far from the weekly peak around 142.50.

No relevant economic reports are due from Canada, Australia, and New Zealand. AUD/USD and NZD/USD posted important gains for the second week in a row and the highest close since July.

The USD/CAD was falling below 1.3300, marking the lowest weekly close since August. Gold posted the second-highest weekly close on record, with the main risk coming from a repricing of Fed easing expectations.

Also Read:
Gold steadies above $2053 after flirting $2070 post PCE data