Markets Await US Economic Data (11.27.2024)

US PCE Data is Expected to Shape the Market

EUR/USD parity continued to test the 1.05$ level for a week but could not be permanent and remained below 1.05$ again.  Meanwhile, the dollar index remained stable around 106.9 on Wednesday as investors braced for the release of the latest US PCE price index, which is the Federal Reserve’s preferred measure of inflation. Market participants are also focused on other key data, such as initial jobless claims, a second reading of GDP, and reports on personal income and spending.

Minutes from the Fed’s November meeting showed that officials were optimistic about inflation easing and the strength of the labor market, which supports the possibility of further rate cuts. However, they expressed a preference for gradual changes. Currently, markets are pricing in a 63% chance of a 25 basis point rate reduction by the Fed next month. On Tuesday, the dollar initially surged after Trump threatened tariffs on China, Mexico, and Canada, but then reversed course as traders awaited more details on the proposed tariffs.

Resistance levels for the euro are at 1.0530, followed by 1.0600 and 1.0660. Support levels are at 1.0450, 1.0400, and 1.0330.

Yen Strengthens on BOJ Rate Increase Expectations

The Japanese yen rose above 152.5 per dollar on Wednesday, reaching its highest level in more than two weeks, driven by speculation that the Bank of Japan might increase interest rates in December. BOJ Governor Kazuo Ueda recently suggested that a rate hike could be possible next month due to concerns about the yen’s weakness. Investors are now looking forward to Tokyo's inflation data later this week for additional insights into the future of monetary policy. The yen also gained support from heightened safe-haven demand after US President-elect Donald Trump threatened tariffs on China, Mexico, and Canada.

Resistance levels for the yen are at 152.80, 153.90, and 154.60. Support levels are at 152.00, 150.90, and 150.20.

Gold Gains as Key US Data Approaches

Gold moved higher toward $2,640 per ounce on Wednesday as investors continued to analyze the latest FOMC meeting minutes and awaited important US economic data for more clues on the Federal Reserve's monetary policy direction. The minutes showed that officials were confident about inflation easing and the strength of the labor market, but also indicated a cautious stance on further rate cuts, favoring gradual changes.

Most investors are still expecting a 25 basis point rate cut in December, with a probability of approximately 63%, which would lower the opportunity cost of holding non-yielding gold. Traders are closely monitoring upcoming data, including initial jobless claims, the second estimate of GDP, and PCE figures set for later in the day. However, gold’s attractiveness was somewhat limited by reduced geopolitical tensions and a stronger US dollar.

Resistance levels for gold are at $2,650, $2,675, and $2,710. Support levels are at $2,630, $2,600, and $2,575.

Ceasefire Weighs on Silver

Silver has recovered after finding temporary support around $30.00 as the US Dollar retreated. Israeli Ambassador Mike Herzog has indicated that a ceasefire with Hezbollah could be reached soon, which has reduced demand for metals such as silver. The metals started the day on an upward trend as the ceasefire has not yet been reached and Israel continues its attacks on Lebanon. Meanwhile, the appeal of safe-haven assets continues as the Russia-Ukraine war continues.

Resistance levels for silver are at $31.10, $31.55, and $32.10. Support levels are at $30.20, $29.85, and $29.30.