This
trading week is ending on a rather positive note as the S&P 500 broad
market index added about 2% to reach 4043 points, which is even higher than the
maximum 4041 points reached last week. The Federal Reserve (Fed) was behind the
major reason for this growth as the regulator gave a nod to a possible lower
trajectory of the interest rate hike in December.
So,
investors are now betting on a 50-basis points interest rate hike in December.
But this doesn’t seem to change the general outlook as at the same time the Fed
has projected a 50% chance of a recession. Such bold estimates, together with
much worse Purchasing Managers’ Index (PMI) readings than predicted and the
largest in 40 years inversion of the yield curve for ten year and two year
Treasuries, may indicate that something very dramatic is coming and if this is
the case, it will be much bigger that the Global Financial Crisis of 2002-2009.
Next week
is expected to be a macroeconomic one as U.S. GDP data and Non-Farm Payrolls
will be released. The Organisation of Petroleum Exporting Countries and its
allies (OPEC+) are expected to hold a session on December 4, just before G7
countries are set to decide on the level of the price cap for Russia’s crude.
So, we may expect a sluggish trading week ahead of us.
Technically,
the S&P 500 broad market index may continue to rise to 4070-4080 points,
but also have chances to roll back to the support at 3980-4000 points.
Crude prices
have no more steam to return above the support level of $88-90 per barrel of
Brent crude. So, it is likely prices could continue to go down towards $78-80
per barrel and further down to $55-65 per barrel together with the downslide of
stock indexes. Next week could be much more complicated for the oil market.
Gold prices
enjoyed the Fed’s grace and rebounded to $1750 per troy ounce. However, prices
are seen to rather move towards the downside to test the support at $1710 per
ounce. If this does happen chances for a further slide towards the lows of 2022
at $1600-1650 per ounce would increase gradually.
The money
market continues to experience elevated volatility that prevents the use of
short-term signals. So, it is better to place orders that are attached to
longer perspectives. Short trades for AUDUSD that were opened at
0.63700-0.64200 are still on the go and may be terminated when the pair reaches
the 0.59000 area.