The Christmas week seems to be ending without a festive mood. The S&P 500 broad market index is slowly losing ground as it is declining by a modest 0.8% to 3825 points. However, the loss was felt more during the week as it touched 3763 points or 2.0% below last week’s close.
The U.S. stock market tried to recover at the beginning of the week but failed after the publication of the U.S. Gross Domestic Product (GDP) figures for the third quarter of 2022. The 3.2% rise quarter-on-quarter surprised markets as only 2.9% was expected. Strong GDP figures reminded markets that the Federal Reserve (Fed) could continue its monetary tightening without fearing it could harm the economy.
The downside target for the S&P 500 index at 3700-3800 was achieved, but the index may continue to fall further. PCE Price Index data, that will be released today, is of high priority for the Fed. So, any developments shown by this data would likely define whether the stock market would continue to fall or pause until next Wednesday at least.
The U.S. Dollar, which is acting like an angry pit bull, demands that it be "let off the leash" so it can strengthen by 4-5% and signal that the S&P 500 index would continue down towards 2200-2400 points. However, the Greenback is holding its ground firmly this week, and there are some doubts whether it could be “unleashed” during Christmas.
Oil prices are stuck close to the resistance of $78-80 per barrel of Brent crude. The U.S. Administration is signaling that it will be replenishing its strategic oil reserves soon. Russia has still not responded to the EU price cap on Russia’s seaborne oil. Vladimir Putin promised to sign an order that will act as his response to this EU action at the beginning of next week, while Russia’s energy minister Alexander Novak said this order would ban sales of oil and oil products to countries that joined this price cap rule. These are positive signals for oil prices, but fears over an upcoming recession and some relaxed provisions of the price cap are not allowing oil prices to have any upside options.
Consolidation of Brent crude prices at $78-80 per barrel is rather seen as a temporary departure that would end a new selloff wave to the nearest support at $68-70 per barrel. The lowest targets are seen currently at $60-70 per barrel.
Gold prices are charting an upside formation with targets at $2000-2100 per troy ounce by the middle of 2023. Despite upside attempts of gold prices to rise above $1820, this has not initiated an aggressive upside scenario with targets at $2050-2150 per ounce by the middle of February. So, prices are likely to roll back towards $1700-1720 per ounce by the middle of January. Only then may the gold rally be resumed.
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 of AUDUSD were opened at 0.68000-0.68500, and for EURUSD at 1.05000-1.05500. Downside targets for these trades are at 5000 points below opening prices. The same applies to stop-loss orders that are 5000 points above order prices.