Price volatility for several products remains elevated as trading begins in Europe on Friday (20/12/2024), ahead of the release of inflation data based on Personal Consumption Expenditure (PCE) from the United States, scheduled for 20:30 WIB.
This data could trigger significant volatility across all products, as it serves as a benchmark for the Federal Reserve in determining monetary policy. Here is the data from Trading Central:
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- PCE Inflation (Nov/year-on-year): forecast 2.5% vs previous 2.3%
- Core PCE Inflation (Nov/year-on-year): forecast 2.9% vs previous 2.8%
GOLD
Gold prices (XAUUSD) are trading within a range of $2,589 – $2,607 per troy ounce at the start of European trading, showing relatively narrow movement compared to the previous two days.
However, the PCE inflation release could result in significant price fluctuations. Should the data come in higher than the forecast, it is likely that the Federal Reserve will refrain from aggressively cutting interest rates next year.
This scenario could place considerable pressure on gold during tonight’s trading session.
OIL
Oil prices (CLS10) fell to a daily low of $68.55 per barrel as European trading began. Negative sentiment is stemming from central banks in various countries adopting a more cautious stance on cutting interest rates next year.
This lowers global economic outlook, contributing to bearish sentiment for oil due to potential decreased demand. Such negative sentiment is expected to influence oil trading tonight, with potential for further downward pressure if US PCE inflation data exceeds the forecast.
EURUSD
EURUSD is experiencing high volatility in the range of 1.03431 – 1.03085 as early European trading starts.
The pair rebounded after Germany released its producer price index (PPI) for November, reporting an annual increase of 0.1%, significantly surpassing the forecast of -0.3% and the previous month’s -1.1%. This marks the first positive growth for Germany’s PPI since July 2023.
However, the increase in EURUSD remains limited due to the upcoming PCE inflation data release. If the release is higher than the forecast, EURUSD could face renewed downward pressure.
GBPUSD
GBPUSD rebounded to 1.25201 at the start of European trading after dropping to 1.24746 earlier in the morning. This level is the lowest seen in over seven months, prompting a technical correction.
Given this context, GBPUSD could again experience pressure if US PCE inflation data is higher than the forecast.
USDJPY
USDJPY dropped to 156.621 after peaking at 157.925, marking a new five-month high, which triggered profit-taking activities.
Sentiment for USDJPY remains very positive, as the Federal Reserve is expected to avoid aggressive interest rate cuts next year, while the Bank of Japan (BoJ) remains uncertain about when it will raise rates.
This means that if the US PCE inflation data comes out higher than the forecast, USDJPY could receive a positive sentiment boost.
Nasdaq
Nasdaq fell to 21,084 at the start of European trading, a drop of 323 index points compared to Thursday’s close.
Profit-taking actions have prompted this decline in Nasdaq, and there’s potential for this trend to continue tonight if US PCE inflation data exceeds the forecast.
