US and German inflation data plus UK jobs and German economic sentiment
DAX => The index rises towards 14400
Gold => The commodity rises towards 1790
GBP/USD => The pair rises towards 1.2280
DAX rises ahead of ZEW economic sentiment
The DAX closed 0.4% lower on Monday, extending losses from the previous week. The market mood remained cautious ahead of a big week for economic data and central banks. Today the index is edging higher but continues to hover below 14,500 as attention turns to German inflation data and the closely watched ZEW economic sentiment index. Inflation data is the final rating for November it is expected to confirm the initial reading of 10% YoY, down from 10.4%YoY. This is the second reading, so it tends to be less market-moving than the first. Meanwhile, economic confidence is expected to improve again in December, continuing an upward trend from November amid hopes of inflation falling and thanks to government energy measures. Improving economic sentiment could help to boost the DAX.
Where might the DAX price head to?
The DAX has traded relatively range-bound over the past month. The index has been capped on the upper side by 14600 and on the lower side by 14150. The RSI continues to hold above 50, suggesting that momentum supports the bulls; the 50 sma is also crossing above the 200 sma in a golden cross bullish signal. Buyers will look for a rose over 14600 to create a higher and extend the rally to 15000 the March high. On the downside, sellers could look for a move below 14150 to extend losses to 14000 the August high and 13750, the 100 sma.
Gold rises with US CPI due
Gold fell at the start of the week amid profit-taking ahead of US inflation data and the Federal Reserve interest rate decision on Wednesday. Gold failed to push above resistance1800 before retreating to a low of 1781. Today the precious metal is edging higher ahead of US inflation data, which is expected to cool in November to 7.3%, down from 7.7%. Core inflation which strips out more volatile items such as food and fuel, is also expected to slip to 6.1%, down from 6.3%. Cooling inflation could support expectations of the Fed slowing the pace at which it hikes rates, which would be beneficial for non-yielding gold. Inflation data is unlikely to deter the Fed from a 50 basis point rate hike in December, but it may influence the chances of a smaller-sized rate hike in January.
GBP/USD rises with jobs data in focus
GBP/USD climbed cautiously higher at the start of the week UK economy rebounded in October at a faster pace than expected. UK GDP raise 0.5% MoM in October after contracting -0.6% in September following the Royal funeral. Today attention remains on the UK economic calendar with the release of labour market data. Unemployment in the UK is expected to tick higher two 3.7% in October up from 3.6%. Meanwhile, average hourly wages, including bonus, is expected to grow 6.2%, up from 6%, a figure which could unnerve the BoE, raising concerns of a higher wage inflation spiral. The data comes ahead of UK inflation figures tomorrow and the BoE rate decision on Thursday.
Support for the pair could be seen at 1.2120 (100 sma) and 1.20 (psychological level).
Resistance could be seen at 1.2350 (last week’s high) and 1.25 (psychological level).