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The markets were mixed on Thursday as investors-maintained caution ahead of the festive holiday break. There was limited data on the European economic docket and UK GDP data was the most outstanding. The UK economy shrank more than expected in the third quarter underpinning the Pound’s weakness. Traders are closely watching the US GDP data, Initial Jobless Claims and Japanese Monetary policy meeting minutes.
AUDUSD rallied by +0.75% as the dollar weakens ahead of the US GDP data. The dollar suffered selling pressure despite a jump in US CB Consumer Confidence for December. The data rose to 108.3 vs 101.0 surveyed, however, investors are keenly waiting on the US data that may offer clues on Fed policy. The Australian dollar advanced as investors brace for the Christmas Holiday and Chinese Covid Curbs. Bulls extended gains slightly above the 0.6750 level, a 5-day high and a break above that level could see extended targets at the 0.6800 level. On the downside, 0.6670 remains a key support level.
EURGBP surged by +0.29% following UK economic data shrinking more than expected in the third quarter. The UK GDP YoY slumped to 1.9% against the 2.4% anticipated, while the GDP QoQ data fell to -0.3 vs -0.2%. The data revived recession fears projected in 2023. The Euro remained resilient as investors wind down activity for the festive season. The pair rallied towards 0.8825, a 3-month high however, a failure to challenge that level could cause a near-term correction towards the 0.8700 level, a 5-day low.
CADJPY plunged by -0.35% ahead of Japanese Monetary policy meeting minutes. The Japanese Yen maintained gains following the BoJ’s yield pivot earlier this week. Investors are pricing in a policy normalization going into 2023 hence underpinning the Yen’s strength. The Canadian dollar failed to sustain Wednesday’s gains despite better-than-expected CPI data and a rally in oil markets. The pair extended gains following a break below the 97.25 level a 9-month low, and the next key level is at 96.00 psychological level.
European Stocks were slightly higher on financial and energy boosts. The FTSE100 rallied by +0.24% after closing above 7500, a near-term resistance. Upside gains are capped by the 7600 level. CAC40 was down -0.11% as 6600 near-term resistance continues to hold. A break below the 6500 near-term support could trigger selling pressure towards the 6400 level. DAX was neutral at +0.03% as bulls halts the rally at the 14100 level.
US stock futures took a breather ahead of US GDP data. The S&P500 futures trimmed gains by -0.24% as bulls retract from the 3900-resistance level. The key support level to watch out for is the 3800 level. Nasdaq100 was down -0.22% as bulls get challenged by the 11300 level. To the upside, bulls could target the 11500 level if 11300 fails to hold, while to the downside 11000 remains a key support for near-term bulls. DJIA index futures edged lower by -0.24% as bulls struggled to keep gains above the 33400 level. Bears may retract towards the 33100 level if 33400 continues to hold.
In commodities, gold was up +0.10% steadily trading near a weekly high as bulls maintain gains above the 1800 level. A break above 1820 could reinforce bullish strength towards the 1880 key resistance level. However, a break below the 1800 level could cause near-term correction towards the 1780 level, previous resistance-turned-support.
