GBPUSD struggles amid mixed UK data ahead of key US inflation gauge

Dicey markets are in fashion as traders brace for the Christmas holidays. Adding to the market’s inaction is a cautious mood ahead of this week’s top-tier US data, namely the US Core Personal Consumption Expenditure (PCE) Price Index for November. Apart from that the mixed geopolitical concerns and unclear UK data also limit the momentum traders’ ability to move the quotes.

With this, the Santa Rally on Wall Street resumed and the Treasury bond yields dropped to the fresh low in five months, which in turn drowned the US Dollar Index (DXY) toward the lowest level since late July and helped the Gold Price to renew a three-week high.

That said, the Oil prices marked a volatile day, initially dropping to $72.40 before ending the day near the opening levels, as Angola announced its abrupt departure from the Organization of the Petroleum Exporting Countries (OPEC) group, mainly to mark its revolt against the quota system. It’s worth noting that the nation’s exit from the Oil cartel fuelled hopes of more output and lured bears but the geopolitical tension in the Red Sea and the Middle East prod the sellers.

Elsewhere, EURUSD edges higher while GBPUSD struggles to justify upbeat Retail Sales and softer GDP data. Further, the USDJPY also appears inactive but the AUDUSD drops the most among the G10 currency pairs.

It should be noted that the BTCUSD remains idle but the ETHUSD portrays the traders’ preference for Altcoins.

Following are the latest moves of the key assets:

• Brent oil picks up bids to $79.60, mildly bid for the second consecutive day by the press time.
• Gold price edges higher at the three-week top, up 0.20% intraday near $2,050 at the latest.
• USD Index lacks clear directions at the lowest level since July-end, around 101.30 as we write.
• Wall Street closed positive but the Asia-Pacific stocks edged lower. Further, the equities in the UK and Europe trade mixed during the early hours.
• BTCUSD prints minor losses near $43,800 but ETHUSD is up more than 2.0% near $2,280 as we write.

US Dollar licks its wounds ahead of Fed’s preferred inflation…

The latest increase in the odds favoring the US Federal Reserve’s (Fed) rate cuts in 2024, backed by Thursday’s data, exerts downside pressure on the US Dollar, which in turn allows the commodities to edge higher. It’s worth observing, however, that the commodities hesitate to lure the momentum traders ahead of the key data/events, as well as due to the mixed geopolitical headlines.

Talking about the US data, the final readings of the US third quarter (Q3) Gross Domestic Product (GDP) Annualized slid beneath the 5.2% initial forecasts to 4.9% while the GDP Price Index also softened from 3.5% to 3.3%.

Further, the Personal Consumption Expenditure (PCE) Prices eased to 2.6% QoQ for Q3 versus the earlier estimations of 2.8% and the Core PCE dropped to 2.0% QoQ for the said period compared to 2.3% preliminary forecasts.

Additionally, the Philadelphia Fed Manufacturing Index printed a three-month low of -10.5 versus -3.0 expected and -5.9 prior whereas the Initial Jobless Claims rose to 205K for the week ended on December 15 from 203K previous readings (revised from 202K) and the analysts’ estimations of 215K.

The People’s Bank of China (PBoC) released a statement citing Governor Pan Gongsheng to defend the measures to keep credit growth reasonable, which in turn suggests reasonably ample liquidity tools.

Earlier in the day, Japan’s National Consumer Price Index (CPI) for November eased to 2.8% from 3.3% while the National CPI ex Food, Energy also softened to 3.8% YoY versus 4.0% prior. Also, the Bank of Japan (BoJ) released the Minutes of the latest monetary policy meeting which confirmed the monetary policy board members’ agreement about the need to patiently maintain the current easy policy.

The UK Retail Sales for November marked better-than-forecast figures but the GDP growth eased and bolstered calls for the Bank of England’s (BoE) dovish moves in 2024, especially amid the British recession woes. The same joins the recent consolidation in the US Dollar to prod the GBPUSD buyers.

• Strong buy: USDCAD, USDJPY
• Strong sell: Crude Oil, US Dollar, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

US data in the spotlight ahead of Christmas…

Moving forward, the US Core PCE Price Index for November, expected to ease to 3.3% YoY from 3.5% prior, will be eyed closely to determine the market’s intraday moves. Should the scheduled data match downbeat forecasts, or ease further, the US Dollar will refresh the multi-month low and allow the riskier assets to rise further. In addition to the US Core PCE Price Index but also the Durable Goods Orders and New Home Sales for the said month will also be important for the intraday directions. Also on the list is the monthly prints of Canadian GDP for October.

May the trading luck be with you!