Market Drivers – US Session, December 19

The Japanese Yen suffered a significant decline on Tuesday as a result of the Bank of Japan’s dovish stance. Governor Kazuo Ueda noted the challenge of articulating a plan to leave the negative interest rate policy, but the BoJ did not specify a timeline for liftoff. The USD/JPY pair first surged from 142.80 to 144.95, but a weaker US dollar and falling global rates caused it to retreat under 144.00. The general tendency is still negative. Japan’s trade statistics is expected on Wednesday.

Although gold surged, the precious metal was unable to maintain their gains over $2,040, which cast doubt on any more near-term rises. While silver managed to recover $24.00, it was unable to stay above the 20-day Simple Moving Average. In order to facilitate long-term growth, XAG/USD (Silver/US Dollar) would need to rise over $24.30.

The US Dollar Index continued to rise but accelerated its decline from its December lows. The DXY dropped towards 102.00 and lost more than 0.30%. Wall Street stocks surged once more, as the Dow Jones closed at a record high. Nearly 3.90% is the yield on the 10-year Treasury note.

Economic Data

The US housing sector reported mixed data, with Housing Starts rising to 1.56 million, surpassing the market consensus, but Building Permits declining to 1.46 million.

In Canada, the Consumer Price Index rose 0.1% in November, against expectations of a 0.2% decline, and the Canadian Dollar (CAD) rose across the board. The Bank of Canada will release the Summary of Deliberations on Wednesday.

Currencies

EUR/USD rose but couldn’t regain 1.1000, consolidating around 1.0970. Germany’s Producer Price Index is due on Wednesday, while Eurostat reports on October’s Current Account, Construction Output, and December’s Consumer Confidence.

GBP/USD fell towards 1.2700, holding above the 20-day Simple Moving Average, but the upside is limited by resistance around 1.2800. UK data is due on Wednesday.

USD/CHF reached four-month lows under 0.8600 and is set to test 2023’s low around 0.8550. The Swiss National Bank’s quarterly bulleting is expected on Wednesday.

AUD/USD reached its highest level in five months, driven by US Dollar weakness and improved risk appetite. Commodity price rallies also supported the Australian Dollar.

What to watch on Wednesday?

In the Asian session on Wednesday, trade statistics will be released by Japan. It is not anticipated that China will alter interest rates. The UK inflation data will be the day’s main release. Additional US housing data is scheduled for later in the day, along with the quarterly bulletin from the Swiss National Bank and the publication of the minutes from the Bank of Canada meeting. We’ll be watching Santa’s Wall Street rally very carefully.

More housing data is expected with Existing Home Sales release on Wednesday, and the CB Consumer Confidence survey is due.

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