Forex

The third quarter's U.S. economic growth was more substantial than anticipated due to company investment and consumer spending increases. In the most recent report, personal consumption increased by 2.3% compared to an estimated 1.7% increase due to higher services spending.

Household spending has been supported by a healthy labor market and wage growth, but it's still being determined how Americans will be able to continue this spending trend until 2023. A crucial indicator of inflation, the personal consumption price index that excludes food and energy increased by an annual 4.7% by the third quarter, somewhat more than the prior estimate.

Among the major currencies, only Euro has been able to show some strength against the US dollar throughout December. As of December 23rd, EURUSD gained 1.95% compared to the opening price of the current month at 1.0404.

The euro benefited from a loosening of Fed policy in mid-December. The ECB and the US Federal Reserve reaffirmed their commitment to fighting inflation and said they would continue raising interest rates.

According to December's most recent Purchasing Managers' Index (PMI) statistics, private sector production in the Eurozone decreased at its slowest rate in four months, which might indicate that the recession approaching in the EU won't be as bad as initially thought.

Higher interest rates often help currencies, but some economists worry that the BoE's overzealous monetary tightening could harm the overall British economy and devalue the pound. After data revealed that the British economy shrank slightly more than anticipated, the pound declined to its lowest level since mid-November versus the euro and increased against a declining dollar.

The Japanese yen strengthened to about 132 per dollar in the fourth quarter of 2022, which caused a decline in the US dollar's value relative to it (USD/JPY).

After the "lower-than-expected" US Consumer Price Index (CPI) statistics raised hopes that maximum inflation had been achieved and that the Fed would tighten less firmly in its next meetings, JPY has been trading near its best levels in two months.

Commodities

With a half-point increase on December 14, the Federal Reserve's benchmark interest rate reached 4.5% from 4.25%, the maximum level in 14 years.

The Fed's seventh rate increase this year will make borrowing for homes, cars, and other purchases considerably more expensive for families and businesses. On the other side, you'll get a little more interest if you have enough money to save.

Crude oil reached $83.0 after finishing a round of increases. Under this level, the market is currently creating a consolidation range. Upward escape and additional expansion to 85.55 are anticipated. A connection of corrections to 82.40 once this threshold is reached, followed by expansion to 92.50, is partially eliminated.

Under 1820.62, Gold is still creating a consolidation range. The quotations are anticipated to continue to decrease until they reach 1797.22, from which point they could continue to decline until they reach 1763.30.

Indices

S&P 500 index reached 3894.0 after finishing a wave of correction. A wave of a drop to 3757.4 should start before the end of December. Following that, there should be a decrease to 3760.0 and a correction to 3890.0, after which the trend may continue to 3644.4.

Due to increased volatility (27.68% for stocks and 8.50% for Treasury bonds) and rising correlation (67.16%), the index kept its conservative allocation. The allocation to U.S. Treasury futures grew to 57.60%, and the average equity allocation for December was barely above zero.

The DAX forms a lovely hammer candle and begins a bullish reversal.

Aside from the combination of two strong supports, the 38,2% Fibo and the upper line of the falling wedge formation, there have been no notable changes in the Dow Jones index.

Market Events

US equities may be prepared to close 2022 on a positive note, but not without considering these three significant data sets that will be made public in mid-December. Three significant new events in December that have the potential to influence market behavior, at least until the end of the year, will be widely watched by stock market investors.

Federal Reserve’s meeting on December 13–14 was quite exceptional and crucial. The significance of the meeting is increased since the Federal Open Market Committee (FOMC) has not only determined the size of the rate hike in December but also revealed estimates for the future. The Fed's projections collect predictions from Fed members for the most likely trends in real gross product (GDP) growth, unemployment rate, and inflation.

Furthermore, Canada’s monthly GDP and US Core PCE Price Index will be released on December 23, which is expected to be critical to the overall market sentiment.