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Markets Patchy In Response to Monday Risk-On

FOREX
  • The ability for markets to hold the late Monday risk-on rally has varied, with GBP/USD remaining firm, but EUR reversing the move to keep the weekly EUR/USD lows within range on any further fade. This keeps the trend outlook in GBPUSD bullish, with resistance at 1.2827, the Dec 28 high and bull trigger, well within range. Clearance of this level would confirm a resumption of the uptrend and open 1.2881, a Fibonacci retracement point.
  • CHF populates the bottom-end of the G10 table, with the persistent slide in EUR/CHF and USD/CHF stalling at the beginning of 2024. Weakness in CHF comes despite the firmer-than-expected Dec CPI release earlier this week.
  • The USD Index trades modestly higher, but still below the Monday/Friday highs - risk and positioning headed into the Tuesday session is likely to dominate, with CPI and earnings risks taking up the focus for the tail-end of the week.
  • AUDUSD is consolidating despite the bounce and recovery in crude prices, and trading closer to its recent lows. The recent move lower is considered corrective and the medium-term trend direction remains up. Moving average studies highlight an uptrend and trendline support drawn from the late October low remains intact.
  • Trade balance data takes focus going forward, with both Canadian and US trade numbers on the docket. The US trade deficit is expected to widen to $64.9bln from October's $64.3bln. The central bank speaker slate picks up slightly, with Fed's Barr and ECB's Villeroy both set to make appearances after the European close.
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