It is a quieter week on the economic calendar. The tier-one US data are book-ending the week, with an eye on the US consumer, with ISM Services on Monday and the prelim Michigan Sentiment on Friday. The consensus is looking for ISM Services to drop slightly but remain in reasonable expansion territory, however, Michigan Sentiment looks set to drop back for the second month in a row.

Central bank interest rate decisions for the RBA and the BoC will also be closely watched. The loose ends of the final Q3 GDP are cleared up for the Eurozone, Australia and Japan. Chinese trade balance and CPI will impact market sentiment too. LatAm traders will be kept on their toes with a packed calendar of CPI and central bank rates.

Watch for: 

  • North America – ISM Services, Factory Orders and the PPI, with an important decision from the Bank of Canada
  • Europe – Eurozone Retail Sales, German Factory Orders and final Eurozone GDP
  • Asia – The Reserve Bank of Australia, GDP for Australia and Canada, in addition to Chinese inflation
  • LatAm – Inflation for Colombia, Chile, Mexico and Brazil, with interest rates for Chile and Brazil

North America

N.B. Forecasts are the latest available consensus 

US dollar (USD)

With the US data just creeping ever lower and Fed members (most specifically FOMC Chair Powell) leaning towards a 50 basis points hike in December, there is momentum in the USD correction. It continues to be fuelled by the downside bias to US Treasury yields. With US yields and the USD still strongly negatively correlated, the US 10-year yield breaking decisively below 3.56% would be a confirmed break that would open further downside for the USD. This would leave the Dollar Index moving decisively below the August low at 104.64 and complete a big top.

Although the ISM and Michigan Sentiment will be watched, there is a lack of significant data this week. The focus will be on the final few days before the Fed blackout period begins and any Fed speakers on the schedule.

Canadian dollar (CAD)

The cautious Bank of Canada is expected to hike rates by just 25bps this week. Previously it had been leading the Fed in hiking but has increasingly retreated in recent weeks. This is weighing heavily on the CAD performance.

  • USD/CAD – CAD is struggling despite the broad USD correction. The top that was completed on USD/CAD below 1.3500 still implies 1.3020, however, recent price action shows a basis of growing support. There is a higher low at 1.3315 above the 1.3220 key November low. RSI momentum is hovering around 50 and the outlook is becoming more neutral. 


The continued slide in Treasury yields and the corrective outlook for the USD is still broadly supportive for commodities and specifically metals prices. Silver continues to outperform gold during the risk-positive phases. 

The OPEC+ decision on production is expected to continue the current production levels. Oil has been supported by demand-side news with China slightly easing its COVID restrictions. However, broadly the ranging outlook for Brent Crude oil under $100 is likely to continue. 

  • Brent Crude Oil – With the rebound into the mid-range pivot area between $88.25/$90.40 faltering this is an important week for the medium-term outlook. Running down the four-week downtrend could see a retest of the $81.40/$83.50 lows. Above $90.40 engages further recovery.
  • Gold – The big double-bottom base pattern continues to imply recovery to $1844. The neckline support is strong around $1728/$1735 and with strong momentum, weakness is a chance to buy. A support correction into $1767/$1786 would be a good basis for moves above $1808 towards the target. 
  • Silver – The breakouts through resistance reflect the bullish near to medium-term outlook. Weakness remains a chance to buy, and any higher low between $21.60/$22.25 would be an opportunity for the bulls. Above $23.25 the resistance is at $23.95.

Wall Street

The risk recovery remains intact whilst US bond yields continue to move lower and the USD is corrective. This plays into the recovery on Wall Street. We continue to believe that there is upside potential in the recovery for NASDAQ but it still looks to be a move with the handbrake on. 

  • S&P 500 futures – The medium-term recovery continues having broken out of the range 3912/4050. A move above 4145 would be the next leg higher. Weakness into breakout support is a chance to buy, with the rising 21-day moving average a good basis of support.
  • NASDAQ 100 futures – The recovery is still struggling for upside traction. However, there is still a positive bias with the RSI holding consistently above 50 now. The bulls could be ready to test the primary downtrend this week, with the next resistance at 12955. There is good support between 11465/11730.
  • Dow futures – The strong run of higher lows continues, even though the sharp uptrend has been breached in the past week. However, with the daily RSI consistently between 55/70, there is strong momentum and we look to use weakness as a chance to buy. There is support between 33620/34245 this week. The next important resistance is the key April lower high of 35410.


N.B. Forecasts are the latest available consensus 

Euro (EUR)

As the ECB meeting in the December edges closer the consensus is looking for a 50 basis points hike. The recent decline in inflation (it is still too early to know if this was the peak) and concerns over impending economic contraction are driving expectations of a less aggressive approach from the ECB. The EUR continues to be supported by more encouraging core/periphery yield spreads which has trended lower over the past six weeks.

  • EUR/USD – The recovery continues to break through resistance and is now set to test 1.0615 this week. A break above there would open the key June high of 1.0785. The 18-month primary downtrend is also set to be tested. Momentum is strongly configured and weakness is still a chance to buy. The support band 1.0220/1.0290 is key.   

British pound (GBP)

The UK may have a fairly worrying list of fundamental factors that should be weighing on GBP, however, whilst risk appetite remains positive, GBP is acting as a pro-cyclical currency and continues to recover well. As the winter gets colder and deeper, this performance may not last. 

  • GBP/USD – The rally continued to break through resistance as an expanding uptrend channel moves higher. Breaking decisively clear of 1.2290 would be the next step forward and open the May high at 1.2665. Momentum is strong and near-term weakness should be seen as a chance to buy. Support between 1.19800/1.2030 is strengthening.


The recovery trends are holding on European indices. The question is just how far the moves can go before profit-taking sets in and there is a near-term corrective move. December is traditionally a strong month for equities. However, there are a few signs of trend exhaustion starting to develop.

  • DAX – The seven-week uptrend means the DAX is within striking distance of testing the massive long-term resistance at 14700/14800. However, coming into this week there is a warning with a negative divergence on the RSI. Supports at 14322 and then 14125 will be an important gauge.
  • FTSE 100 – The recovery is close to testing the huge resistance band 7650/7695 which has been the limit throughout 2022. However, the RSI is suggesting potential exhaustion in the move and this could lead to profit-taking. Reaction to support at 7438 will be key.


N.B. Forecasts are the latest available consensus 

Japanese yen (JPY)

All whilst bond yields were rising around the world, the JPY underperformed badly throughout much of 2022. However, with yields now collectively falling, the JPY is in considerable ascendency. Yield spreads with JGBs are tightening with interest differentials more favourable for the JPY. Whilst yields continue to fall, we expect JPY will perform strongly.

  • USD/JPY – The run has accelerated lower bursting through downside targets with little regard to support, with 130.40/131.50 next in the firing line. However, the move has become oversold on the RSI and that may induce a near-term consolidation or possible technical rally at some stage. Resistance is strong between 137.65/139.40. 
  • AUD/JPY – The corrective bias has grown in recent weeks leading towards a test of the key medium-term support band between 90.50/91.40. Momentum is strongly negatively configured now with downside potential. Near-term strength is a chance to sell with resistance between 92.15/92.85.

Australian dollar (AUD)

There is some division in the consensus over the size of the RBA rate hike this week. A 25bps hike is likely, and there is a possibility of 40bps too (which would get the rate back into line with quarter per cent numbers). As such the reaction to the RBA could see elevated volatility. AUD has tended to perform much better recently with swings of positive risk appetite.

  • AUD/USD – The Aussie recovery against the USD is more of a slow and steady move (compared to the NZD especially). With positive momentum configuration, weakness is still a chance to buy with good support now between 0.6585/0.6640. The next resistance to be tested is at 0.6915.

New Zealand dollar (NZD)

The NZD continues to be the best performing major currency (along with the JPY). The continued hawkish stance of the RBNZ is sustaining the recovery momentum. If risk appetite remains positive this week, we expect the recent trends of kiwi outperformance to continue. 

  • NZD/USD – The impressive recovery on the kiwi continues. The rally has accelerated away from the six-week recovery trend to form a more aggressive four-week uptrend and is eyeing a test of the key upside resistance at 0.6470. There is strong breakout support between 0.6155/0.6250.


N.B. Forecasts are the latest available consensus 

Brazilian real (BRL)

As Brazilian Government bond yields have fallen back in the past week, the BRL has engaged in a near-term recovery. The expectation of a consistent reduction in inflation whilst the central bank rate is expected to remain lofty at 13.75% should help to underpin the BRL, for now. It will be interesting to see how long the central bank will keep rates this high. Any sign of a rate cut may begin to weigh on BRL. 

  • USD/BRL –after the bull failure a couple of weeks ago which pulled the pair back from 5.5000 there has been a retreat once more into the multi-month range. Support is around 5.0500 up towards the resistance now 5.46/5.56. Technical indicators point to continued fluctuation within the range and we are neutral.

Mexican peso (MXN)

The continued and steady strength of the MXN remains impressive. With inflation set to fall again, the central bank should be on hold, for now. However, the prospect of rate cuts may start to become an issue that begins to weigh on the MXN in the coming weeks.

USD/MXN – The MXN has strengthen to levels not seen since March 2010 as USD/MXN trends decisively lower and has dropped below the 19.250/19.400 support area (which is also now the initial resistance). The next key support of note is around 18.550 from February 2010, the level just before COVID.  

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