Technical Analysis

Central Banks this week meetings

Ahead of the meeting, investors are expressing concerns about the U.S. economy and whether the Fed would hike further after December. As recent as September, the Fed came out as a little too optimistic about the economy next year. At this meeting, they may come down a little on their assessment of future economic growth. Investors aren’t expecting anything new from the Bank of Japan (BOJ). Look for policymakers to leave its benchmark rate unchanged at -0.1%. Japan is also scheduled to release its latest inflation data. The Bank of England (BOE) is expected to keep interest rates unchanged at Thursday’s meeting. Policymakers are holding back on raising rates at this meeting because of recent mixed economic data and fears over Brexit.

This week marks a pivotal period for U.S. Federal Reserve Policy. While the Fed is widely expected to raise it benchmark interest rates Wednesday by 25 basis points, traders are more likely to react to the comments of Fed Chairman Jerome Powell. The Bank of Japan is also expected to make an interest rate decision. It should leave its key short-term rate unchanged. The Bank of England is also expected to keep rates on hold.

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Support and Resistance for December 17 2018 - European Session

Support Resistance:

Currency Pair EUR/USD GBP/USD USD/JPY AUD/USD Dow Jones
GOLD
Resistance 3 1.1430 1.2740 114.80 0.7305 24300 1245.00
Resistance 2 1.1395 1.2680 114.40 0.7280 24250 1242.50
Resistance 1 1.1340 1.2620 113.80 0.7240 24200 1240.00
Market 1.1315 1.2582 113.20
0.7181 24120 1238.50
Support 1 1.1260 1.2540 112.70 0.7170 24100 1235.00
Support 2 1.1205 1.2500 112.20 0.7140 24040 1232.50
Support 3 1.1140 1.2470 111.50 0.7100 24000 1230.00
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Market Review for December 17 , 2018

There were no material stats released through the Asian session this morning, leaving the markets to focus on news from the weekend the mid-year economic and fiscal outlook report (MYEFO) out of Australia and what lies ahead for the week.

For the Aussie Dollar, the MYEFO report was a positive, with a struggling Australian coalition government now on the precipice of delivering a surplus for the financial year 2019/20, after bringing the 2018/19 forecasted deficit down from a budget forecasted A$14.5bn to just A$5.2bn. Forecasts are for a surplus of A$4.1bn for FY2019/20.

Throwing in tax cuts, an extended growth cycle in the Australian economy and unemployment levels down at 2012 lows, it’s not all bad for a government behind early in the opinion polls. The report also reflected an unspent allocation of an additional A$10.8bn for future expenditures that could also include further tax cuts in the New Year to support household spending and offset bruising household debt levels.

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Economic releases a week ahead 17-21 December 2018

On the Macro

For the Dollar, it’s a big week ahead, with key stats including manufacturing PMI numbers on Monday and Thursday and November housing sector on Tuesday and Wednesday. A particularly busy day on Friday sees November durable goods, finalised 3rd quarter GDP numbers, the FED’s preferred November Core PCE Price Index figures, November personal spending and prelim December consumer sentiment numbers scheduled for release. While the stats will have an influence, it will ultimately boil down to the FED and its economic projections and rate path for 2019 and whether the Friday stats will influence the Dollar. The Dollar Spot Index ended the week up 0.96% to $97.433.

For the EUR, it’s a relatively quiet week on the data front, with stats limited to November finalized inflation numbers and October trade data out of the Eurozone on Monday, Germany business sentiment numbers on Tuesday, wholesale inflation numbers out of Germany on Wednesday and French consumer spending and German consumer sentiment numbers on Friday. On the data front we will expect focus to be on the Eurozone’s year-on-year inflation numbers on Monday and Germany consumer sentiment numbers on Friday. Outside the numbers, sentiment towards the Eurozone and global economic outlook and policy outlook will continue to influence. The EUR/USD ended the week down 0.64% to $1.1306.

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Support and Resistance for December 14 2018 - US Session

Support Resistance:

Currency Pair EUR/USD GBP/USD USD/JPY AUD/USD Dow Jones
GOLD
Resistance 3 1.1430 1.2740 114.80 0.7305 24500 1242.50
Resistance 2 1.1395 1.2680 114.40 0.7280 24450 1240.00
Resistance 1 1.1340 1.2620 113.80 0.7240 24400 1237.50
Market 1.1275 1.2555 113.61
0.7200 24320 1234.00
Support 1 1.1260 1.2540 112.70 0.7170 24300 1232.50
Support 2 1.1205 1.2500 112.20 0.7140 24240 1230.00
Support 3 1.1140 1.2470 111.50 0.7100 24200 1227.50
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