Price volatility for various products remains high at the onset of European trading on Friday (December 20, 2024), ahead of the US inflation data release based on Personal Consumption Expenditure (PCE) 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 setting monetary policy. Here are the details 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 fluctuating within the range of US$ 2,589 – US$ 2,607 per troy ounce as European trading commences. This movement is relatively narrow compared to the last two days.
However, the PCE inflation release could lead to significant price shifts. Should the data be higher than the forecast, it is likely that the Federal Reserve will not aggressively cut interest rates next year.
This scenario could exert substantial pressure on Gold in tonight’s market.
OIL
Oil prices (CLS10) dropped at the start of the European session, hitting a daily low of US$ 68.55 per barrel. The negative sentiment arises from central banks in several countries adopting a more cautious approach to interest rate cuts in the coming year.
This decline affects global economic prospects, generating negative sentiment for Oil, as demand may not remain high. Such negative sentiment is likely to persist in Oil trading tonight, with increased pressure expected if US PCE inflation data surpasses the forecast.
EURUSD
EURUSD is experiencing notable volatility, fluctuating between 1.03431 and 1.03085 as early European trading begins.
EURUSD surged following the release of Germany’s Producer Price Index (PPI) for November, reported at 0.1% year-on-year (YoY), significantly better than the forecast of -0.3% YoY, and the previous month’s figure of -1.1% YoY. This marks the first positive growth in Germany’s PPI since July 2023.
Nonetheless, the rise in EURUSD remains constrained with the impending release of PCE inflation data. If this data comes in above the forecast, EURUSD could face renewed pressure.
GBPUSD
GBPUSD climbed to 1.25201 at the beginning of European trading after dipping to 1.24746 earlier in the morning. This level is the lowest in over seven months, triggering a technical correction.
Given this context, there is potential for GBPUSD to come under pressure again if the US PCE inflation data exceeds the forecast.
USDJPY
USDJPY fell to 156.621 after reaching a five-month high of 157.925. The earlier increase prompted a profit-taking reaction.
The sentiment for USDJPY remains very positive as the Federal Reserve is not expected to aggressively cut interest rates next year, while the Bank of Japan (BoJ) has yet to indicate when it will raise rates. This means that if US PCE inflation data reflects a higher than forecast figure, USDJPY may receive additional favorable sentiment.
Насдак
The Nasdaq index plummeted to 21,084 at the start of the European trading session. Compared to Thursday’s closing, the Nasdaq is down 323 index points.
The profit-taking activities triggered the drop in Nasdaq. Continued selling pressure is likely if US PCE inflation data is released higher than the forecast.
