This week marks the year's final major hurdle with the last meeting of American central bankers. Afterwards, investors can focus on organizing end-of-year festivities, mechanically reducing trading volumes. For now, expectations point to an 85% probability of a 25bp interest rate cut. However, as usual, the devil will be in the details of Jerome Powell's speech. Between the end of Quantitative Tightening and an interest-rate cut, the equity market should welcome this flood of liquidity, especially as the main US indices are trading near their November highs (6920 SPX, 26180 NDX and 2540 RUT). Meanwhile, the EUR/USD has reached the short-term pivot of 1.1675/95 while the 10-year US yield sits at a resistance of around 4.17%. All these turning points are to be watched closely. A breakout above 1.1675/95 would open the way to September highs at 1.1920. Conversely, if resistance holds, another wave of declines could well trigger in fine a break of 1.1500/1480, a bearish confirmation point for the medium term (a few months horizon). In parallel, USD/JPY remains supported at 155/154.28, preserving its bullish structure in place since September. No significant change for USD/CHF however, which stays within a horizontal consolidation channel between 0.8130 and 0.7830.
The USD/CAD confirmed the rebound in the CAD mentioned in recent weeks with a break of 1.3835. Same tune against the EUR. The Aussie has pushed through 0.6550 and sits near its September highs of around 0.6710, while the kiwi tests its key resistance zone for the medium-term view at 0.5790/5800.
