• Monetary policy is very restrictive, weighing on supply capacity and investment
• No reason to disagree with market view that neutral rate is around 2.50% to 3.50%
• Tariffs could lead to a return of supply chain disruption as seen in recent years
• Broadly right to say UK has limited direct exposure to US tariffs

Do keep in mind that Dhingra is arguably the most dovish member on the committee. So, it’s important to read her remarks in that context. She was the only one who dissented back in September, voting for a rate cut. And following the 25 bps move last month, she seems to be in the camp to want another one later this month. As things stand, markets are not of the same view with a ~94% probability of no change priced in.

This article was written by Justin Low at www.forexlive.com.

The Russell 2000 has been underperforming
the other major indices recently and failed to extend into new highs. The
conditions for a strong rally into new all-time highs remain in place though.

In fact, Trump’s policies will
be a positive driver for growth in 2025 and with the Fed remaining in an easing
cycle, growth should remain positive and might even accelerate as signalled
already by the Atlanta Fed GDPNow
indicator.

The only bearish reason we
had for the stock market was the rise in Treasury yields in the past couple of
months. That’s generally bearish only when the Fed is tightening policy though
not when yields rise on positive growth expectations.

Right now, the Fed’s
reaction function is that a strong economy would warrant an earlier pause in
the easing cycle and not a tightening. That should still be supportive for the
stock market.

If the Fed’s reaction
function were to change to a potential tightening, then that will likely
trigger a big correction in the stock market on expected economic slowdown. For
now, the pullbacks look as something healthy and opportunities to buy the dips.

Russell 2000
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that the Russell 2000 failed to break into a new all-time high and pulled
back. The buyers will need to see the price breaking higher to increase the
bullish bets into new highs. The sellers, on the other hand, will keep on stepping
in around the recent highs to position for a drop back into the 2290 support.

Russell 2000 Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a minor downward trendline
defining the current pullback. This might turn into a bull
flag if the price were to break above the trendline. That’s when we can
expect the bullish momentum to pick up as the buyers will likely pile in more
aggressively. The sellers, on the other hand, will likely lean on the trendline
to position for the drop into the 2290 support.

Russell 2000 Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a strong support
turned resistance around the 2420 level. If the price gets there’s the sellers
will likely step in with a defined risk above the resistance to position for
the drop into the 2920 support. The buyers, on the other hand, will look for a
break higher to start targeting new highs. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we conclude the week with the US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior +0.2%

Looking at the breakdown, there were GDP contributions from household consumption (+0.4%), government expenditure (+0.1%), gross fixed capital formation (+0.4%), and changes in inventories (+0.4%). That is partially offset by a decline in growth for trade i.e. exports less imports (-0.9%) on the quarter.

This article was written by Justin Low at www.forexlive.com.

There was a brief spike above $69 in anticipation of the decision but that has quickly turned with oil prices now falling to the lows for the day. OPEC+ decided to extend their planned output hike by another three months to April, as expected. Oil failed to sustain bids in trading yesterday and it might just be a repeat episode again today. As mentioned earlier:

„It feels like if all of this is not enough to get oil back above $70, there could be more pain to come to start the new year with a narrowing flag pattern forming in recent months.“

Looking at the daily chart, we might be poised for a downside breakout as price action narrows in this coiled region:

This article was written by Justin Low at www.forexlive.com.

The US Dollar continues to
consolidate around the highs as the market reached the peak in the repricing of
interest rates expectations and it will need stronger reasons to price out the
remaining rate cuts for 2025.

This was signalled by the
lack of US Dollar strength after lots of strong US data with the market’s
pricing remaining largely unchanged around three rate cuts by the end of 2025.
We might see the greenback remaining on the backfoot at least until the US CPI
due next week.

On Monday, Fed’s Waller and Fed’s Williams sounded like a rate cut in December
is basically a done deal with the plan to slow the pace of rate cuts
considerably in 2025. That’s in line with the market’s pricing.

We will likely need another
hot CPI report to force them to skip the December cut. In case the data comes
out as expected or even misses forecasts, then we can expect more USD weakness.

On the CAD side, we had the
Canadian CPI recently and the data came in
stronger than expected. This decreased the chances of a 50 bps cut in December
with the market now seeing a 40% chance for such a move. As a reminder, the BoC
is now focused on growth as they met their inflation target.

Tomorrow, we get the Canadian
labour market report alongside the US NFP. Better than expected data should see
the probabilities for a 25 bps cut increasing and give the CAD some support, especially
if the US NFP doesn’t come out too strong. On the contrary, weaker than
expected figures could weigh on the CAD but we might not see a new cycle high
if the USD remains weak.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD is consolidating around the highs after the brief spike on the
Trump’s tariffs threat. The market is still waiting for the US NFP and the US
CPI before picking a direction, so there’s not much to see here. The sellers
will need the price to fall below the 1.3950 level though to start targeting
new lows as such a break should switch the bias from bullish to bearish.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have a trendline
defining the current bullish momentum on this timeframe. If we get a pullback
into it, we can expect the buyers to lean on the trendline to position for a
rally into a new cycle high. The sellers, on the other hand, will want to see a
break below the trendline and the 1.3950 support
to start targeting new lows.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a minor resistance zone around the 1.4090 level. The sellers
will likely keep on stepping in around the resistance to target the 1.3950
support, while the buyers will look for a break higher to increase the bullish
bets into a new cycle high. The red lines define the average daily range for today.

Upcoming
Catalysts

Today,
we get the latest US Jobless Claims figures, while tomorrow we conclude the
week with the Canadian labour market data and the US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

Reuters with the headline, citing a source on the matter. Well, this is as anticipated following the numerous reports since earlier this week and then the supposed agreement here prior to the meeting. WTI crude is up 0.4% to $68.90 but overall movement has been rather minimal so far on the day.

Going back to the decision, the bloc is to unwind output cuts gradually after Q1 next year all the way through until 2026.

This article was written by Justin Low at www.forexlive.com.

From earlier: OPEC+ reportedly have deal in principle to delay output hike

This article was written by Justin Low at www.forexlive.com.

The US Dollar continues to
consolidate around the highs as the market reached the peak in the repricing of
interest rates expectations and it will need stronger reasons to price out the
remaining rate cuts for 2025.

This was signalled by the
lack of US Dollar strength after lots of strong US data with the market’s
pricing remaining largely unchanged around three rate cuts by the end of 2025.
We might see the greenback remaining on the backfoot at least until the US CPI
due next week.

On Monday, Fed’s Waller and Fed’s Williams sounded like a rate cut in December
is basically a done deal with the plan to slow the pace of rate cuts
considerably in 2025. That’s in line with the market’s pricing.

We will likely need another
hot CPI report to force them to skip the December cut. In case the data comes
out as expected or even misses forecasts, then we can expect more USD weakness.

On the GBP side, the last UK CPI report came in higher than expected. The BoE’s
members sounded a bit less dovish recently and although BoE’s Governor Bailey expects four rate cuts by the end
of 2025, the market thinks otherwise seeing three rate cuts as the most likely
scenario for now.

GBPUSD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that GBPUSD eventually pulled back into the major trendline. The sellers will likely step in
here with a defined risk above the trendline to position for a drop into new
lows. The buyers, on the other hand, will want to see the price breaking higher
to increase the bullish bets into the 1.30 handle next.

GBPUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that we have created a range between the 1.2617 support and the 1.2750 resistance. The buyers will
look for a break higher to extend the rally into the 1.30 handle, while the
sellers will likely pile in here for a drop into the support.

GBPUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, there’s
not much else we can add here as the market participants will likely continue
to play the range until we get a breakout for a more sustained move. The red
lines define the average daily range for today.

Upcoming
Catalysts

Today,
we get the latest US Jobless Claims figures, while tomorrow we conclude the
week with the US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior +6.3%
• Market index 213.9 vs 208.0 prior
• Purchase index 161.5 vs 152.9 prior
• Refinance index 498.5 vs 501.7 prior
• 30-year mortgage rate 6.69% vs 6.86% prior

This article was written by Justin Low at www.forexlive.com.

The fundamentals in the
crude oil market haven’t changed much in the past month. In fact, crude oil remains
confined in a range between the 72.00 resistance and the 67.00 support as the
market continues to weigh the future scenarios.

On one hand, we have the
Trump’s victory which might be seen as bearish for fear of the tariffs and a slowdown
in global growth as other countries could retaliate. You can throw there also a
potential increase in supply and the geopolitical risk premium easing with the
Trump’s administration.

On the other hand, we might
have an increase in global growth expectations due to the global central bank
easing and the Trump’s pro-growth policies. We’ve been seeing early signs of
this with the latest US data reaccelerating.

Crude Oil
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that crude oil continues to trade in a range between the resistance around the 72.00 handle and the
support around the 67.00 handle. The buyers will want to see the price breaking
higher to increase the bullish bets into the 78.00 handle next, while the
sellers will look for a break lower to extend the drop into the 65.00 handle.

Crude Oil Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see that the price recently broke above the middle of the range around the
69.50 level which acts as kind of a barometer for the short term sentiment. The
buyers piled in on a break higher and will now target a rally into the top of
the range. The sellers will need to see the price falling back below the 69.50
level to position for a drop into the 67.00 support.

Crude Oil Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see more clearly the recent price action with the rally from the lows likely helped
by strong US ISM Manufacturing PMI data and the positioning into an OPEC+
output cut extension.

If we get a pullback into
the 69.50 zone, we can expect the buyers to pile in for a rally into the 72.00
resistance, while the sellers will look for a break lower to target the lows. The
red lines define the average daily range for today.

Upcoming
Catalysts

Today, we
have the US ADP, the US ISM Services PMI and Fed Chair Powell speaking. Tomorrow,
we get the latest US Jobless Claims figures. Finally, on Friday, we conclude
the week with the US NFP report.

This article was written by Giuseppe Dellamotta at www.forexlive.com.