This trading week is ending on a rather positive note as the S&P 500 broad market index added about 2% to reach 4043 points, which is even higher than the maximum 4041 points reached last week. The Federal Reserve (Fed) was behind the major reason for this growth as the regulator gave a nod to a possible lower trajectory of the interest rate hike in December.
So, investors are now betting on a 50-basis points interest rate hike in December. But this doesn’t seem to change the general outlook as at the same time the Fed has projected a 50% chance of a recession. Such bold estimates, together with much worse Purchasing Managers’ Index (PMI) readings than predicted and the largest in 40 years inversion of the yield curve for ten year and two year Treasuries, may indicate that something very dramatic is coming and if this is the case, it will be much bigger that the Global Financial Crisis of 2002-2009.
Next week is expected to be a macroeconomic one as U.S. GDP data and Non-Farm Payrolls will be released. The Organisation of Petroleum Exporting Countries and its allies (OPEC+) are expected to hold a session on December 4, just before G7 countries are set to decide on the level of the price cap for Russia’s crude. So, we may expect a sluggish trading week ahead of us.
Technically, the S&P 500 broad market index may continue to rise to 4070-4080 points, but also have chances to roll back to the support at 3980-4000 points.
Crude prices have no more steam to return above the support level of $88-90 per barrel of Brent crude. So, it is likely prices could continue to go down towards $78-80 per barrel and further down to $55-65 per barrel together with the downslide of stock indexes. Next week could be much more complicated for the oil market.
Gold prices enjoyed the Fed’s grace and rebounded to $1750 per troy ounce. However, prices are seen to rather move towards the downside to test the support at $1710 per ounce. If this does happen chances for a further slide towards the lows of 2022 at $1600-1650 per ounce would increase gradually.
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 for AUDUSD that were opened at 0.63700-0.64200 are still on the go and may be terminated when the pair reaches the 0.59000 area.