Predicting NZDUSD's Next Moves

Recently, the NZDUSD currency pair reached the important 38.2% Fibonacci support level. This was something we had anticipated earlier, suggesting that the pair might regain and stabilize some of its recent increases. Looking ahead, if buyers, or 'bulls', can keep the currency above this crucial 38.2% mark, we could see the NZDUSD's value start to climb.

However, if sellers, known as 'bears', manage to push the value below this 38.2% Fibonacci level, the pair might enter a longer phase of stabilization, possibly reaching the area known as the Ichimoku cloud.

Brazilian Real Stabilizes Amid Monetary Changes

On Wednesday, the Brazilian real hovered around 4.92 per USD. This comes after it hit a low not seen in over a month the day before. The fluctuation follows key monetary policy decisions from both the Brazilian Central Bank and the US Federal Reserve. Brazil's Central Bank recently decided to reduce interest rates by 50 basis points (bps).

This decision, marking the fourth time the bank has committed to gradual monetary easing, was influenced by slowing local inflation and a somewhat struggling economy. In November, Brazil recorded an annual inflation rate of 4.68%, meeting forecasts and showing a continued decrease since September. Brazil's Finance Minister, Fernando Haddad, pointed out that despite a minor GDP growth in the third quarter, the overall economy is still weakening. In contrast, the US Federal Reserve kept its borrowing costs unchanged, while projecting rate cuts totaling 75 basis points through 2024.

China's Stock Market Dips Amid Economic Uncertainties

Solid ECN – On Monday, a sense of economic unease led to a downturn in China's stock market, with the Shanghai Composite index decreasing by 0.4% to 2,931 and the Shenzhen Component index falling 1.13% to 9,279. These indices hit their lowest points in over a year, reflecting the growing concerns about China's economic stability. Recent mixed economic data from November has highlighted weak demand in the country, a major point of discussion in a high-level policy meeting held last week. Despite setting economic goals and formulating policy strategies, Chinese officials were unable to boost investor confidence.

Attention is now shifting to the upcoming decision on the loan prime rate by the People’s Bank of China, set to be announced on Wednesday. The global market sentiment also suffered, influenced by comments from John Williams, President of the New York Fed, who expressed skepticism about the likelihood of rate cuts. Major losses were recorded by leading companies, with Contemporary Amperex, COL Group, and iSoftStone seeing declines of 5.2%, 11.3%, and 5.8%, respectively.

AUDUSD Stays Bullish Above Key Support

In the realm of technical analysis, the AUDUSD currency pair has impressively established itself above a key support zone, which spans a tight range from 1.6678 to 1.6690.

Turning to the indicators, the Relative Strength Index (RSI) is inching closer to the overbought threshold, indicating a strong buying interest. Simultaneously, the Awesome Oscillator and the Average Directional Index (ADX) both point towards a sustained bullish momentum. While the rising RSI does hint at a possible consolidation phase, the bullish trajectory appears likely to aim for the upper boundary of the bullish channel. This bullish sentiment is further reinforced by the 61.8% Fibonacci retracement level. As the AUDUSD pair continues trading above this level, the bullish forces are expected to maintain their dominance.

NZDUSD Rises, Bullish Trend Foreseen

Solid ECN – The NZDUSD pair recently achieved a notable uptick, reaching the highs of the previous week, closely aligned with the proximity of the Ichimoku cloud. A glance at the 4-hour chart reveals that the ADX lines linger below the 20 mark. This positioning indicates that the NZDUSD has been experiencing a range-bound movement in today's trading, marked by a discernible lack of momentum.

Looking at the RSI indicator, it maintains a position above 50, and the Awesome Oscillator bars present in green, signaling a positive trend. Taking these technical indicators into account, along with the overall market trajectory, it seems probable that the NZDUSD's value might escalate, potentially targeting the upper limit of the bullish flag.

Supporting this bullish stance are the Ichimoku cloud and the lower band of the bullish flag. The bullish forecast for the NZDUSD remains valid as long as it continues to trade above these levels.

Dollar Climbs Back, Awaits Inflation Data

Solid ECN – The value of the dollar has seen an uptick, currently hovering around 102.5 this Tuesday. This rise comes after a dip below 102 just last week. The shift in momentum is partly due to comments from officials at the US Federal Reserve, who have been hinting that expectations for a decrease in interest rates might be a bit hasty.

Among the voices urging caution were Chicago's Austan Goolsbee and Cleveland's Loretta Mester, adding to similar sentiments previously expressed by John Williams from New York. Across the Atlantic, the European Central Bank and the Bank of England have held their rates steady, committing to higher rates in the fight against inflation. Market participants are now keenly awaiting the US PCE inflation figures, hoping for a clearer picture of inflation trends.

BoJ Holds Rates Steady in Year-End Meeting

The Bank of Japan (BoJ) concluded its final meeting of the year with a unanimous decision to keep its key short-term interest rate at -0.1% and the 10-year bond yields close to 0%, as anticipated. The central bank also decided to maintain the flexible upper limit for long-term government bond yields at 1.0%.

Amidst significant uncertainties both domestically and internationally, the BoJ committed to persist with its monetary easing policy. The board emphasized its readiness to adjust to changes in economic conditions, prices, and financial stability. The ultimate goal of the BoJ is to sustainably reach a 2% price stability target, ideally alongside rising wages. The committee also expressed its willingness to implement additional easing measures if necessary. Recently, the central bank governor, Kazuo Ueda, acknowledged that wage growth is trailing behind the increase in prices, casting doubt on the sustainability of the inflation target level.

Rand Dips as Dollar Stabilizes

Solid ECN – The South African rand is currently trading at about 18.6 against the US dollar, a slight decline from its recent one-month peak of 18.3. This change comes as the dollar finds stability, influenced by several Federal Reserve policymakers who expressed hawkish views. These officials are challenging the extent of the interest rate cuts that the markets were expecting for next year.

In South Africa, the Reserve Bank decided to maintain its main lending rate at 8.25% for the third consecutive meeting on November 23rd, a rate that hasn't been this high in 14 years. The bank continues to highlight ongoing inflationary risks. Notably, the annual inflation rate in South Africa decreased to 5.5% in November 2023. This is a drop from the five-month peak of 5.9% seen in October and brings it nearer to the central bank's target range of 3% to 6%.

BoJ's Steady Policy Boosts Tokyo Stocks

Solid ECN – On Tuesday, the Nikkei 225 index rose by 1.4%, reaching 33,219, its highest point in two weeks. The broader TOPIX index also saw an increase, finishing 0.7% higher at 2,334. These gains followed the Bank of Japan's decision to maintain its ultra-easy monetary policy, with a commitment to keeping interest rates low. The bank, however, did not provide any clues about potential changes to this policy in the next year.

Most sectors ended the day lower, except for basic materials, which remained relatively unchanged. Real estate emerged as the standout sector, leading the gains, followed by technology and non-cyclical industries. Among individual companies, Tokyo Electron saw a significant increase of 3.7%, with Fast Retailing and Recruit Holdings both gaining 2.2%.

Gold's Rise and Resistance: Fibonacci Analysis

Solid ECN – In the daily XAUUSD chart, gold recently rebounded from the 50% Fibonacci support level. Now, the metal is trading over the 38.2% Fibonacci support, approaching the resistance zone between $2,047 and $2,057.

Delving deeper with the 4-hour chart, we get a clearer picture of gold's market movements. Here, buyers are striving to keep the price over the 38.2% Fibonacci mark. This bullish trend is backed by various technical indicators. For instance, the RSI indicator is consistently above 50, a good sign for buyers. Moreover, the Awesome Oscillator shows green bars, signaling upward momentum. If this trend continues and the current level holds, we anticipate gold might reach the 61.8% Fibonacci resistance.

Conversely, if gold's price falls beneath its current support, this would challenge the current bullish perspective, potentially leading to a decline in its value.

Rising Aussie Dollar: A Five-Month High

Solid ECN – The Australian dollar has maintained a strong position, staying around $0.675, which is its highest level in nearly five months. This strength is largely due to the dovish (less aggressive) monetary policies of the US Federal Reserve and the Bank of Japan. These policies have put pressure on the US dollar and the yen, in turn boosting other major currencies, including the Australian dollar, commonly referred to as the Aussie.

Furthermore, the Aussie has been positively influenced by an increase in commodity prices. This rise in prices can be attributed to supply disruptions caused by attacks in the Red Sea. Additionally, the possibility of lower interest rates has also played a role in enhancing the overall demand outlook, thus supporting the Australian dollar's value.

Domestically, the situation is also noteworthy. The latest meeting minutes from the Reserve Bank of Australia (RBA) revealed that the central bank had contemplated raising interest rates for a second consecutive month in December. However, the RBA opted to wait for more data before making such a decision, as there were promising signs regarding inflation.

The RBA has also observed that aggregate demand within Australia has slowed more rapidly than they had anticipated. This slowing of demand is coupled with an observation of an accelerating pace of disinflation (a slowing down in the rate of inflation) in other parts of the world. These factors together contribute to the complex economic landscape that the RBA and the Australian dollar are currently navigating.

FTSE 100 Hits 7-Month High on Low Inflation

Solid ECN – On Tuesday, the FTSE 100 experienced a notable increase, rising over 1.5% and reaching a seven-month peak near the 7750 mark. This jump came after the release of inflation data that was lower than expected. The data led to widespread conjecture that the Bank of England might start reducing interest rates as early as March 2023, possibly cutting them by a total of 143 basis points.

The sectors most responsive to interest rate changes were the biggest gainers. Homebuilders saw a 3.6% increase, real estate climbed by 1.4%, and real estate investment trusts (REITs) went up by 1.6%. Additionally, there were significant gains in other areas, with energy stocks growing by 2.5% and banks by 2.1%.