The US Dollar continues to slide, unaffected by US data and despite higher yields.  The Fed's preferred inflation gauge, the Core PCE, will be released on Friday. The AUD/USD maintains a bullish tone amidst thin holiday trading. The AUD/USD rebounded from near 0.6715 and climbed to 0.6800, reaching a fresh four-month high. The key driver continues to be a weaker US Dollar. The rebound in Treasury yields did not help the Greenback.  The US Dollar Index dropped to test monthly lows, falling below 102.00. Treasury yields rebounded with the 10-year yield rising from a fresh monthly low at 3.83% to 3.90%. Economic data from the US showed mixed to negative numbers, with a revision of Q3 GDP from 5.2% to 4.9%, a decline in Initial Jobless Claims, and a slight increase in the Philly Fed. The key report of the week is due on Friday, with the US Core Personal Consumption Expenditure Price Index (Core PCE). It is closely watched as it is a crucial consumer inflation indicator. Expectations are for a 0.2% monthly increase in November, with the annual rate falling from 3.5% in October to 3.3% in November. This number has the potential to impact the market. Australia will report Private Sector Credit, which is expected to show a modest acceleration compared to the previous month. USD dynamics continue to be the key driver with markets in holiday-thinned trade, which could lead to erratic moves. The Dollar remains under pressure, but a correction seems overdue. AUD/USD short-term technical outlook The AUD/USD rebounded sharply and climbed to 0.6798, reaching its highest level since late July. It later pulled back but remains near 0.6800. The daily charts show a bias towards the upside; however, the price is nearing the upper limit of a bullish channel at 0.6820, and the Relative Strength Index (RSI) is in overbought levels, suggesting some consolidation around 0.6800. As long as it stays above 0.6600, the medium-term bias remains to the upside. On the 4-hour chart, technical indicators offer mixed signals. The RSI is approaching 70, momentum is flattening, and the MACD continues to show divergences. Price is well above the 20-period Simple Moving Average (SMA), indicating potential for further gains. Immediate resistance stands at 0.6800, while support is at 0.6760, with a more relevant zone around 0.6735 (horizontal support, 20-SMA and uptrend line). A break below this level could weaken the outlook for the Australian Dollar. Support levels: 0.6760 0.6730 0.6690 Resistance levels: 0.6800 0.6820 0.68400      

MARKETS U.S. stocks rebounded on Thursday following the most significant daily sell-off in months. The market responded to reinforced expectations for deeper interest rate cuts from the Federal Reserve ahead of crucial U.S. inflation data. The S&P 500 surged at the open, sustaining those gains, partially recovering from the most substantial single-day loss since October. The market's movement suggests a comeback driven by investors reacting to the possibility of more pronounced interest rate cuts by the Federal Reserve. Wednesday's decline lacked a clear culprit, and commentators proposed various theories, including concerns about the U.S. economy after FedEx's pessimistic revenue forecast, year-end profit-taking, and zero-day options trading. While the latter appears to be the more probable cause, a combination of factors likely contributed to the sell-off. It's important to remember that the decision to sell at 2:00-2:30 in the afternoon in New York, outside of a surprise on Fed Day, is seldom a collective choice driven by a sudden market-wide realization that the rally had extended too far. However, the picture becomes more transparent with insights from zero-day options derivative traders. The most talked-about and controversial derivatives trade of the year, zero-day options, took center stage as the suspected culprits behind Wednesday's abrupt end to the U.S. equities rally. Constrained by holiday-related trading limitations, market observers pointed to substantial volumes in "put" options with a 24-hour expiration, known as 0DTE options, as a trigger for the sharpest market pullback in almost three months. According to this theory, these trades prompted market makers on the opposite side to hedge their exposure, thereby driving the market lower.  Nevertheless, the sell-off and ensuing rebound likely positioned market participants at or near the center of gravity, where natural pre-event position squaring might have occurred ahead of the crucial PCE data. The Federal Reserve's preferred inflation measure surged to around 5% at the start of the year, surpassing policymakers' 2% target. Despite a 4% six-month annualized pace for the first half of the year, this is expected to drop sharply to just 1.9% for the final six months, as various economists on Wall Street suggested. The week concludes with the last major data release for the year, the core PCE price index. If projections of a 0% monthly change for November hold, the six-month annualized calculation would settle at 2%, aligning with the Fed's definition of price stability. One might be left perplexed if this doesn't set the stage for a Santa Rally and a weaker U.S. dollar. On the flip side, however, a surprisingly hot PCE reading can potentially and significantly disrupt the proverbial bullish rate-cut apple cart. FOREX MARKET The U.S. dollar is considerably weaker ahead of the US PCE data as traders continue to catch a more pronounced case of Federal Reserve rate cut fever. The recent price action in the Yen aligns with our perspective that a postponed exit from negative rates by the Bank of Japan (BoJ) is unlikely enough, given the current external environment, to prompt a sustained sell-off for the Yen. This comes as there is growing speculation that other major central banks, primarily the Fed, may initiate rate cuts earlier and more aggressively in the coming year. The prevailing market dynamics suggest that the conditions for a significant yen sell-off are not ripe; hence, the path of least resistance for USDJPY appears lower. OIL MARKET As traders keep a close eye on the geopolitical risk premium, providing support for oil prices leading up to an extended holiday week, upward movement is encountering obstacles due to another bearish Energy Information Administration (EIA) inventory report. The report disclosed a significant increase of 9.5 million barrels (bbl) in total U.S. oil and petroleum product stocks last week, coinciding with domestic oil production hitting a new record high of 13.3 million barrels per day (bpd). During the week ending December 15, domestic oil stockpiles (excluding the Strategic Petroleum Reserve) increased by 2.9 million bbl, which was unexpected as analysts had predicted a 2.5 million bbl decrease. This rise has resulted in approximately 1% higher inventories than the five-year average. The increase was due to a surge in U.S. oil production, reaching a new record high of 13.3 million bpd the previous week. This is an increase of 200,000 bpd from the preceding week's average. According to the latest Drilling Productivity Report from the EIA, oil production in the bountiful Permian Basin is projected to reach a new record high of 5.986 million bpd at the beginning of 2024. This represents a substantial 38% increase from January 2022, with an additional 218,600 bpd. Similarly, Bakken oil production in North Dakota is expected to rise by 2,000 bpd in January, reaching a new record high of 1.308 million bpd. This projected output signifies a 19.6% year-on-year increase of 214,500 bpd in oil production in...

XAU/USD Current price: 2,042.45 The focus shifts to the US Core Personal Consumption Expenditures  (PCE) Price Index. The US Q3 Gross Domestic Product was downwardly revised from 5.2% to 4.9%. XAU/USD maintains the bullish pressure but needs to advance beyond $2,047.90. Spot Gold trimmed losses and trades above $2,040 a troy ounce. The US Dollar met market's favor throughout the first half of the day amid the poor performance of Wall Street on Wednesday, but softer US Treasury yields limited USD gains. The Greenback changed course ahead of the American session opening, following mixed United States (US) data. Initial Jobless Claims for the week ended December 15 slid to 205K, better than the 215K expected. Additionally, the Q3 US Gross Domestic Product (GDP) confirmed the annualized pace of growth at 4.9%, below the preliminary estimate of 5.2%. The gauge was not enough to spook investors, as Wall Street returned to the bullish path, while government bond yields reached fresh multi-week lows. At the time being, the 10-year Treasury note yields 3.87%, while the 2-year note offers 4.34%. Attention shifts to the US Core Personal Consumption Expenditures  (PCE) Price Index to be released on Friday. The annual reading is foreseen at 3.3% in November, easing from 3.5% in the previous month, indicating easing price pressures. The country will also publish November Durable Goods and the final estimate of the December Michigan Consumer Sentiment Index. XAU/USD short-term technical outlook The daily chart for XAU/USD shows that the risk remains skewed to the upside, as the pair trades near its recent highs, while intraday pullbacks met buyers around a bullish 20 Simple Moving Average (SMA). Technical indicators, in the meantime, lack directional strength within neutral levels, as the bright metal remains below the $2,047.90 peak. Technical readings in the 4-hour chart offer a neutral-to-bullish stance. XAU/USD is finding intraday support around a bullish 20 SMA, which advances above directionless longer ones. Technical indicators, in the meantime, remain within positive levels but without enough directional momentum. Support levels: 2,034.20 2,022.50 2,009.10 Resistance levels: 2,047.90 2,065.60 2,076.10

EUR/USD Current price: 1.0979 The United States will publish the final estimate of the Q3 Gross Domestic Product. The US Dollar remains on the back foot as Treasury yields reach fresh multi-month lows. EUR/USD maintains the upward pressure, aims to test sellers' strength around 1.1000. The EUR/USD pair recovered its bullish poise on Thursday, and nears the weekly high posted on Monday at 1.0987, as the US Dollar resumed its slide ahead of United States  (US) first-tier data. Wall Street ended its winning streak, and major indexes closed in the red in the previous session, dragging Asian and European indexes lower. The USD could not take advantage of the worsening mood as government bond yields extended their slides. In pre-opening trading, the 10-year Treasury note yielded as low as 3.86%, a fresh multi-month low, while the 2-year note offered a minimum of 4.34%, a level that was last seen in June. Market participants are now waiting for the release of the final estimate of the US Q3 Gross Domestic Product (GDP), expected to confirm an annualized pace of growth of 5.2%. The country will also publish a revision of quarterly Personal Consumption Expenditures Prices and Initial Jobless Claims for the week ending December 15. EUR/USD short-term technical outlook The EUR/USD pair seems poised to extend gains as it pressures its weekly high. Technical readings in the daily chart support the case for a bullish continuation, as technical indicators aim north above their midlines, reaching fresh December highs. At the same time, the pair develops above all its moving averages, which anyway remain directionless. Still, the 20 Simple Moving Average (SMA) converges with the 23.6% Fibonacci retracement of the 1.0447/1.1016 rally, providing support at 1.0883. The near-term picture also skews the risk to the upside. Technical indicators head firmly north within positive levels, while a mildly bullish 20 SMA continues to provide near-term support while developing above the longer ones. Support levels: 1.0950 1.0915 1.0880   Resistance levels: 1.1015 1.1050 1.1090

EUR/USD stabilized near 1.0950 after snapping a two-day winning streak on Wednesday. The near-term technical outlook fails to provide a directional bias. Q3 GDP revisions and weekly Initial Jobless Claims will be featured in the US economic docket. EUR/USD lost its traction in the second half of the day on Wednesday and closed in negative territory for the first time this week. Early Thursday, the pair moves sideways near 1.0950 as investors await macroeconomic data releases from the US. In the late American session, Wall Street's main indexes turned south, reflecting a negative shift in risk mood. Following an uninspiring performance in the European session amid retreating US bond yields, the US Dollar (USD) Index benefited from souring market mood and registered small daily gains. Early Thursday, US stock index futures trade in positive territory, pointing to an improving market mood. In turn, the USD Index struggles to build on Wednesday's gains and allows EUR/USD to hold steady. The US Bureau of Economic Analysis will release the final revision to third-quarter Gross Domestic Product (GDP). The US economy is forecast to expand at an annual rate of 5.2%. A downward revision could weigh on the USD with the immediate reaction. Market participants will also pay close attention to the weekly Initial Jobless Claims data. A reading close to 200K could support the USD, while a print above 220K could reflect looser conditions in the labor market and have the opposite impact on the currency's performance. EUR/USD Technical Analysis The Relative Strength Index (RSI) indicator on the 4-hour chart declined toward 50 and EUR/USD returned within the lower half of the ascending regression trend channel, highlighting a loss of bullish momentum. On the downside, 1.0900 (psychological level, static level) aligns as first support before 1.0870 (100-period Simple Moving Average (SMA)) and 1.0850 (200-period SMA). In case the pair manages to return within the upper half of the channel by making a 4-hour close above 1.0970 (mid-point of the channel), it could test 1.1000 (psychological level, static level) before targeting 1.1050 (static level).

Gold attracts some dip-buying amid a softer risk tone and a modest USD downtick. The fundamental backdrop favours bulls and supports prospects for further gains. Breakout through a short-term trading range is needed to reaffirm the positive bias. Gold price (XAU/USD) regains positive traction on Thursday and reverses a major part of the previous day's downfall amid the underlying bearish sentiment surrounding the US Dollar (USD). Growing acceptance that the Federal Reserve (Fed) will pivot away from its hawkish stance and start cutting interest rates as early as March 2024 drag the US Treasury bond yields to a multi-month low. In fact, the yield on the benchmark 10-year US government bond drops to its lowest level since July and undermines the Greenback, benefitting the US Dollar-denominated commodity. Apart from this, a softer risk tone around the equity markets is seen as another factor driving haven flows towards the precious metal. Meanwhile, the prospect of a global rate-cutting cycle suggests that the path of least resistance for the non-yielding Gold price remains to the upside. The median forecast in Federal Open Market Committee (FOMC) members' Summary of Economic Projections has the federal-funds rate ending 2024 at 4.6%, signalling three 25 basis points (bps) rate cuts. Meanwhile, the CME Group's FedWatch Tool indicates that the markets are pricing in a cumulative of around 150 bps rate cuts by the end of next year. Adding to this, a big drop in the UK inflation during November, to its lowest rate in over two years, lifted bets that the Bank of England (BoE) will also start cutting interest rates in the first half of next year. Furthermore, the recent run of softer-than-expected inflation data from the Eurozone, along with the softening in rhetoric from several European Central Bank (ECB) members, suggest that the risk has now shifted towards earlier rate cuts. That said, Fed and ECB officials have been pushing back against market bets for rapid interest rate cuts next year. This, in turn, is holding back bulls from placing aggressive bets around the Gold price. Traders also prefer to wait on the sidelines ahead of the US Core Personal Consumption Expenditure (PCE) Price Index, due on Friday, which might influence the Fed's future policy decision and provide a fresh directional impetus to the non-yielding yellow metal. In the run-up to the key data risk, traders on Thursday will take cues from the US economic docket – featuring the final Q3 GDP print, the usual Initial Weekly Jobless Claims and the Philly Fed Manufacturing Index. This, along with the US bond yields, will drive the USD demand and provide some impetus to the Gold price later during the early North American session. Apart from this, the broader risk sentiment should further contribute to producing short-term opportunities. Nevertheless, the aforementioned fundamental backdrop seems tilted firmly in favour of bullish traders. Technical Outlook From a technical perspective, the recent range-bound price action constitutes the formation of a rectangle pattern on short-term charts and marks a consolidation phase before the next leg of a directional move. Against the backdrop of last week's post-FOMC rally from the vicinity of the 50-day Simple Moving Average (SMA), the occurrence of a golden cross, with the 50-day SMA holding above the 200-day SMA, favours bullish traders. Furthermore, oscillators on the daily chart are holding in the positive territory and are still far from being in the overbought zone, validating the constructive outlook for the Gold price. That said, it will still be prudent to wait for a sustained breakout through the top boundary of the aforementioned trading band, around the $2,047-2,048 region, before positioning for any further appreciating move. The XAU/USD might then accelerate the positive move towards the next relevant hurdle near the $2,072-2,073. The momentum could get extended further and allow the Gold price to reclaim the $2,100 round figure. On the flip side, immediate support is pegged near the $2,028-2,027 region. This is followed by the $2,017 zone, or the lower end of the trading band, which if broken might shift the short-term bias in favour of bearish traders. The subsequent decline could then drag the Gold price to to the $2,000 psychological mark en route to the 50-day SMA, currently near the $1,992-1,991 area. The XAU/USD could then drop towards last week's swing low, around the $1,973 region, and decline further to a technically significant 200-day SMA, near the $1,957 zone.