Market Watch AU – 21st December 2023
The US-dollar advanced against the majors across the overnight sessions, most notably against the Sterling which fell sharply after the UK inflation release for November, dropping to 3.9% which was far lower than the economist expectations of 4.4%. From the US , existing home sales unexpectedly rose in November. The AUDUSD retreated from recent highs, as suggested and looked to test consolidation levels around support at 0.6720/25. While the Australian rates outlook remains at a ‘higher for longer’ scenario against a backdrop of looser policy ahead in the US, this could tempt investor flows away from the USD and favour the AUD to our relatively high yields. Aussie traders will look to buying opportunities on these dips and positioning for the pair to challenge 0.68-cents as the next resistance point.
The Wall Street rally ran out of steam, after all three indices hit their intraday highs and retreated late in the session. Rate cut optimism, that has been fueling the advance, tempered today and investors contemplated a softer landing and higher for longer interest rates scenario from the Fed. The DJI gave up -1.3%, the S&P500 fell -1.5% and the Nasdaq was down -1.5% by close. Australian shares are expected to open lower today, as investors remain sidelined ahead of the US CPI data later this week.
Gold prices held steady, as markets await fresh US economic data later this week, for further clues as to the direction for the US Fed on interest rates next year.
Copper prices rose on China demand due to restocking of inventories, but gains were limited by a firmer US-dollar . Iron Ore futures on the Dalian exchange rose modestly again yesterday as traders monitor inventory levels and easing demand due to smelter maintenance ahead of winter restocking.
Brent Crude Oil prices remain firm, around $80/bbl, as markets remain cautious over global trade disruption arising from last week’s Red Sea incident, where tankers were attacked by Houthi forces.
Open today 0.6730
Yesterday’s Range 0.6725 / 0.6779
Open today 0.6248
Yesterday’s Range 0.6237 / 0.6298
Yesterday’s Range 1.0754 / 1.0838
Yesterday’s Range 0.6150 / 0.6191
Yesterday’s Range 4.8098 / 4.8426
Yesterday’s Range 0.5305 / 0.5354
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