A round of profit taking as new year gets going

GBPUSD – technical overview

Signs have emerged of the market wanting to put in a longer-term base after collapsing to a record low in September 2022. The November 2022 monthly close back above 1.2000 strengthens this prospect. Any setbacks should now be well supported ahead of 1.2000. Next key resistance comes in at 1.2849.

• R2 1.2849 – 2023 16 June high – Strong
• R1 1.2828 – 28 December high – Medium
• S1 1.2700 – 29 December low – Medium
• S2 1.2612 – 14 December low – Medium

GBPUSD – fundamental overview

The Pound has cooled off a bit in recent sessions. Last week, UK nationwide house prices were flat and a little weaker than forecast. Meanwhile, a KPMG survey showed 41% of UK consumers feeling less financially secure than a year ago. Key standouts on today’s calendar come from German, Eurozone, UK, Canada and US manufacturing PMIs, US construction spending, and the New Zealand GDT auction.

USDJPY – technical overview

The market remains confined to a strong uptrend, with sights set on a retest and break of the multi-year high from 2022 at 151.95. A push through this level will open the next major upside extension towards 155.00. Key support comes in at 140.00, with only a weekly close below to delay the constructive outlook.

• R2 144.96 – 19 December low – Strong
• R1 142.85 – 27 December high – Medium
• S1 140.25 – 28 December low – Medium
• S2 140.00 – Psychological – Strong

USDJPY – fundamental overview

The Yen is coming under pressure as the new year gets going. Indeed, we have seen broad based US Dollar demand. But we're also seeing Yen selling in the aftermath of the major earthquake on New Year's Day. A lot of the focus in the coming months will be on whether or not the BOJ is actually serious about exiting NIRP. Key standouts on today’s calendar come from German, Eurozone, UK, Canada and US manufacturing PMIs, US construction spending, and the New Zealand GDT auction.

AUDUSD – technical overview

There are signs of the potential formation of a longer-term base with the market trading down into a meaningful longer-term support zone. Only a monthly close below 0.6200 would give reason for rethink. Back above 0.6900 will take the big picture pressure off the downside and strengthen case for a bottom.

• R1 0.6900– 16 June high – Strong
• R2 0.6871 – 28 December high – Medium
• S1 0.6781– 29 December low – Medium
• S2 0.6724 – 21 December low – Medium

AUDUSD – fundamental overview

The Australian Dollar is holding up well on this Tuesday despite broad based US Dollar demand. It seems the currency is getting a boost from iron ore prices at an 18 month high on optimism around China stimulus. On Sunday, President Xi was on the wires saying China would deepen reforms to sustain long-term economic development, while vowing to strengthen growth, momentum and employment. Softer Aussie PMI reads were shrugged off. Key standouts on today’s calendar come from German, Eurozone, UK, Canada and US manufacturing PMIs, US construction spending, and the New Zealand GDT auction.

USDCAD – technical overview

Above 1.3000 signals an end to a period of longer-term bearish consolidation and suggests the market is in the process of carving out a more significant longer-term base. Next key resistance now comes in up into the 1.4000 area. Setbacks should be very well supported down into the 1.3000 area.

• R2 1.3415 – 15 December high – Strong
• R1 1.3293 – 22 December high – Medium
• S1 1.3177 – 27 December low– Medium
• S2 1.3119 – 20 July low – Strong

USDCAD – fundamental overview

Oil came back under pressure last week, the US Dollar is making a little comeback, and US equity futures have been correcting off recent highs. All of this has opened a round of weakness in the Canadian Dollar after an impressive run of gains. Key standouts on today’s calendar come from German, Eurozone, UK, Canada and US manufacturing PMIs, US construction spending, and the New Zealand GDT auction.

NZDUSD – technical overview

Overall pressure remains on the downside with the market continuing to stall out on runs up into the 0.6500 area. At the same time, there are some signs of the market wanting to put in a longer-term base. Ultimately, a break back above 0.6500 would be required to take the medium-term pressure off the downside and encourage this prospect. A monthly close below 0.5800 will intensify bearish price action.

• R2 0.6412 – 14 July high– Strong
• R1 0.6370 – 28 December/2023 high – Medium
• S1 0.6232 – 21 December low – Medium
• S2 0.6170 – 14 December low – Strong

NZDUSD – fundamental overview

A wave of broad based profit taking on US Dollar shorts along with some risk off flow have been behind this recent pullback in the New Zealand Dollar as the new year gets going. Key standouts on today’s calendar come from German, Eurozone, UK, Canada and US manufacturing PMIs, US construction spending, and the New Zealand GDT auction.

US SPX 500 – technical overview

Longer-term technical studies continue to look quite extended, begging for a deeper correction ahead. Look for rallies to be well capped in favor of lower tops and lower lows. A monthly close back above 4800 will be required to delay the outlook. Next key support comes in at 4536.

• R2 4800 – Round Number – Strong
• R1 4796 – 29 December/2023 high – Medium
• S1 4691– 20 December low – Strong
• S2 4536 – 30 November low – Strong

US SPX 500 – fundamental overview

The Fed has finally bent to the will of the market, with the December 2023 policy decision revealing rate projections coming down from previous and more in line with what the market has been looking for. This has translated to more investor friendly policy going forward, which could now open the door for a run to fresh record highs in 2024. At the same time, we worry inflation remains a risk both the market and Fed are not taking as seriously as needed, which could once again force the Fed back into a more restrictive path and weigh heavily on stocks.

GOLD (SPOT) – technical overview

The 2019 breakout above the 2016 high at 1375 was a significant development, opening the door for fresh record highs. Setbacks should now be well supported above 1900 on a monthly close basis ahead of the next major upside extension towards 2500.

• R2 2175 – 4 December/Record high– Strong
• R1 2100 – Round Number – Medium
• S1 2015 – 15 December low – Medium
• S2 1973 – 13 December low – Strong

GOLD (SPOT) – fundamental overview

The yellow metal continues to be well supported on dips with solid demand from medium and longer-term accounts. These players are more concerned about inflation risk and a less stable and upbeat global growth outlook. All of this should keep the commodity well supported, with many market participants also fleeing to the hard asset as the grand dichotomy of record high equities and record low yields comes to an unnerving climax.