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APAC Week Ahead: The Christmas Rally is in doubt

Fed reiteration of “higher for longer” rates dashed hopes for a Christmas Rally, with global major indices finishing the week lower for the second straight week. The recession fears returned amid the recent weak economic data from influential economies. This week, the US will report its final GDP and PCE data, which will offer more clues for its economic trajectory. Plus, the BOJ’s policy meeting may shift investors’ attention to Yen’s movements again, where the US dollar seems to lose steam against Asian currencies.

What are we watching?

  • The US dollar swings in directions: The US dollar index finished flat for the second consecutive week as the Fed’s hawkish stance did not boost the dollar’s strength due to a further decline in the US bond yields. It seems that recession fears outweigh Fed’s guidance and send rates down.
  • A deepened selloff in Tesla shares: The star EV maker lost its glamour since CEO Elon Musk takes over Twitter as he had to sell more Tesla holdings to fund his new business, with a total amount reaching $40 billion since last year. Tesla stocks experienced the worse week since 2020.
  • The Japanese Yen and Chinese Yuan hold tightly: Though the US dollar picks up strength again amid the Fed’s decision, the two major Asian currencies seem to endure well, with USD/JPY and USD/CNH repeatedly pulling back from their key resistance of 137.80 and 6.9930.  
  • Gold losses steam: The gold futures struggled to hold above 1,800 as the US dollar swung. The precious metal now enters a range movement between key support of around 1,780 and resistance of 1,835.
  • Crude oil rebounds: The oil prices rebounded from the key support level of 70 as inflation-correlated commodity prices picked up momentum again amid the war-intensified supply issues.

Economic Calendar (19 Dec – 23 Dec) All time is in Australia AEST


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