The central bank torch will pass to the Bank of Japan next week. Even though the consensus is for no policy changes, the prospects for the yen have started to improve heading into a potentially stormy year. There's also a heavy dose of data releases from Canada and the United States. 

Outlook: Today the data overload slows down and the main event is the S&P manufacturing PMI for Dec, expected unchanged at 47.7 from Nov, with services perhaps up to 45.5 from 46.2. San Francisco Fed Daly speaks at noon. As the data above indicates, everybody is slowing down, if by less than the gloomsters were predicting only a few weeks ago. All the central banks that raised rates this week and promised an unbreakable commitment to killing inflation are calling for a soft landing. The US economy is slowing, if not fatally so. The Atlanta Fed’s latest Q4 GDPNow stands at 2.8%, from 3.2% last week. Each of the big factors fell. Christmas is 9 days away and while interest in year-end closing levels is as keen as ever, the quality of the analysts’ work gets smudgy and weak. There is too much distracting attention to Musk, who is nearing Trump in obnoxiousness and narcissism. Are we getting the dollar bounce that so many factors seem to justify, or was yesterday a flash in the pan? To get to an answer, we need to decide whether the Fed in particular will chicken out if data shows recession—go back and look at the Empire State and Philly Fed indices. This is what the market is counting on—an end to hiking sooner than the Fed says, in 2023 instead of 2024. But on the whole, we don’t see catastrophically bad data anywhere—yet. Ah, but winter can be a hard one, and economists are already warning that while energy inventories may suffice this time, next year wil be a different kettle of fish. Next week we will be flooded with forecasts for 2023. Every forecaster knows perfectly well it’s a foolish and wasteful enterprise to try to forecast, but markets pay us to do it and it’s needed for decision-makers, who also know perfectly well they will probably have to changes horses in midstream. Our own forecast for the dollar is higher for longer, alongside the Fed’s narrative, but we have yet to see it begin to take hold. This is an excerpt from “The Rockefeller Morning Briefing,” which is far larger (about 10 pages). The Briefing has been published every day for over 25 years and represents experienced analysis and insight. The report offers deep background and is not intended to guide FX trading. Rockefeller produces other reports (in spot and futures) for trading purposes. To get a two-week trial of the full reports plus traders advice for only $3.95. Click here!

BoE raised rates yesterday by 50bp as expected, but speculators look towards the end of the hiking cycle due to recession risk which was highlighted by BoE's Tenreyro & Dhingra. They said that 3% bank rate is more than enough to bring CPI back to target. In fact, Dhingra warned of a deeper longer recession with higher rates already before. As such, it's not a surprise to see the pound weakening since yesterday. Notice that the price fell below the wedge, likely stepping into a corrective phase. 1.19-2.0 is support. We talked about this technical reaction a few days before the market turned as you can see on our screenshot of Elliott wave analysis below. The question is where we go from here? Well, we try to focus on a minimum expectation which in our case is a three-wave drop, ideally wave four. Stocks are already weakening and if this will be the case in the next few sessions we think that pound can very easily make an A-B-C pattern to the south. Updated analysis Broken wedge suggests that temporary top is in and that market is making a three wave decline. Elliott wave analysis GBP/USD Past Elliott Wave expectations When you see a wedge formation at the end of an extended leg, then you should be aware of a change in trend, especially ahead of important events such as was BoE rate decision this week BLACK FRIDAY Monthly 50% Off Lifetime Crypto, FX and major Global Markets. Apply here.

For the third time since April, the S&P500 index faces a sharp sell-off from the 200-day average. And all times, the fundamental reason is a more hawkish Fed policy than the markets had hoped for. In June-August and October-December, the S&P500 started with a technical reversal after it oversold the market. Later buying was supported by signs of weakening inflation, which fed hopes that the Fed would soften its tone. However, Powell and co have been persistent in embedding the idea in the markets that the fight against inflation will be extended. About as insistent as assurances about the "transitory" nature of inflation in 2021.  Even if the Fed is wrong in its forecasts now, it can raise the rate so sharply that it will first put a heavy burden on the financial market and, through it, on the entire economy. It is believed that it takes several quarters before the effects of a change in monetary policy are fully reflected in the economy. This is probably why the economy has continued to create jobs despite the most violent monetary tightening cycle since the 1980s. More problems lie ahead, which is predicted by the Fed, expecting GDP growth of only 0.5% and a jump in unemployment from 3.7% to 4.6% over 2023. However, we must remember that the market can be wrong too. The general expectation right now is that the developed world is suffering permanently from low inflation and that the current jump is due to an unfortunate concurrence of one-off factors, the effects of which are already wearing off. So far, we saw a pullback in ship container costs to pre-covid-19 'normal' levels and Crude Oil return to 12-month lows. However, low unemployment and de-globalisation can keep inflationary pressures markedly above the Fed's target for the foreseeable future. However, this week's dynamics are worrying if one looks out of context and only at the charts. After the inflation release, the almost 3% surge in S&P 500 futures was trashed in less than 3 hours. The market closed that day under the 200-day MA, doubting the downtrend break. The strong selling since Wednesday is very similar to what we saw in April and August reversals. On top of that, the index flew over the 61.8% Fibonacci mark of the rise since the beginning of October during the fall. In Thursday's trading, the S&P500 fell helplessly out of the up-trending trading channel that has been neatly forming over the past two-plus months.  In theory, a sharp rebound is possible today due to the large-scale quarterly expiry of futures and options. However, a likely increase in trading volumes today could work for both bulls and bears. In addition, we note that still the Fed has lowered the rate hike step and did not dismiss the idea that the next hike could be 0.25 points. We also continue to see bullish signals in related markets. The Dow Jones index remained above its 200-day average and drew a "golden cross" to start the week. EURUSD and GBPUSD have crossed their 200-day averages and attracted buyers on the dip.

WTI Oil  The WTI oil price heads lower for the second straight day, as sentiment soured on unexpected hawkish stance of three major central banks, though optimism on hopes about China’s demand recovery and fears on supply disruptions, remains alive. The WTI contract, despite losses in past two days, is on track for bullish weekly close that may delay larger bears, which face headwinds from psychological $70 support, where the action was repeatedly rejected. Signals from daily chart are in favor of further weakness as negative momentum is strengthening and MA’s are in bearish setup, while stochastic emerges from overbought territory. This suggests that the downside remains at increased risk, especially if Friday’s action closes below 10 DMA ($74.39) which would open way for renewed attack at pivotal $70 zone. Firm break below $70 would risk fresh acceleration and expose targets at $68.50 (50% retracement of $6.52/$130.48) and $65.05 (200WMA) in extension. Near term bias is expected to remain with bears while the action stays below the double-top at $77.73/79 (Dec 14,15) and only firm break here would ease downside pressure and allow for stronger bounce. Res: 75.97; 76.55; 77.79; 79.79. Sup: 73.03; 71.91; 70.00; 68.50. Interested in WTI technicals? Check out the key levels

US markets Stock futures were down slightly overnight after a negative day for U.S. equities on Wednesday. After announcing a half a percentage point interest rate hike, the Federal Reserve said it would continue to increase interest rates throughout 2023 and forecasted that the terminal rate will go above 5.1%, higher than expected. U.S. interest rates are currently at a 15-year high of 4.5%. The current 10 Year U.S. Treasury yield is set at 3.50270%. Market Price Move Dow Jones 33,947.10 -1.40% S&P 500 3,998.84 -1.79% Nasdaq 11,239.94 -1.93% Russell 2000 1,840.22 -2.78%   Canadian markets The Canada Food Price Report forecasts that the cost of groceries will increase by 7% next year. The report estimates that a family of four will need to spend CA$16,288 on groceries in 2023, an increase of CA$1,065 from this year. A single woman in her 40s is expected to spend CA$3,740 on groceries, while a single man would spend CA$4,168. Vegetables are expected to rise by 8%, seafood by 6%, fruit by 5%, and milk by 11%. 20% of Canadians will likely continue relying on food banks, the report says. Market Price Move TSX 20,242.26 –1.19%   European markets European markets saw losses on Monday despite positive movements in Asia hours earlier. The Stoxx 600 was down 0.4% on the day, with almost all sectors ending in the red. Food and beverage stocks fell 1.5% on the day, leading losses, while basic resource stocks gained 0.6%. SBB, a Scandinavian real estate company, was up 13%, leading gains, while Rational, a German appliance manufacturer, dragged down markets with an 8% drop. Market Price Move Euro STOXX 50 3,956.53 -0.54% UK (FTSE 100) 7,567.54 0.15% Germany (DAX) 14,447.61 -0.56% France (CAC 40) 6,696.96 -0.67%   Asian markets Shares in Asia were down on Tuesday morning after rising on Monday. China briefly paused trading on Tuesday to commemorate former President Jiang Zemin, who died last week. China is expected to ease its “Zero Covid” strategy following protests and despite high case numbers. Hon Hai Precision Industry, an Apple supplier, was down after reporting that its revenue fell by 11% in November and 29% since the start of October. Market Price Move S&P Asia 50 4,518.19 2.13% Japan (Nikkei 225) 27,857.08 0.13% South Korea (KOSPI) 2,407.17 -0.50% China (Hang Seng) 19,485.15 -0.17% India (SENSEX) 62,834.60 -0.05%   Commodities Oil prices were down on Monday amid concerns about how future rate hikes could impact the U.S. economy. Brent crude lost 3%, while U.S. West Texas Intermediate fell 3.3%. Economic and manufacturing activity in China remains suppressed due to COVID-19 regulations and high case numbers, which has caused a decline in demand for oil. OPEC+ confirmed that it plans to cut output by 2 million barrels a day through the end of 2023. Market Price Move Oil (NYSEARCA: OIL) 29.38 -3.13% Gold (NYSEARCA: GLD) 164.39 -1.72% Silver (NYSEARCA: SLV) 20.44 -3.99% Corn (NYSEARCA: CORN) 25.65 -0.77% Lumber (NASDAQ: WOOD) 75.55 -1.33%   Currency exchange rates The U.S. Dollar rose on Monday, following reports that the U.S. services industry saw increased activity in November. The non-manufacturing PMI reached 56.5 in November, up from 54.4 in October. The U.S. Dollar was down 1.4% last week and 5% in November — its worst month since 2010. The dollar was up against all major currencies on Monday, including the Yuan, Yen, Euro, and Pound. Market Price Move UK(GBP) £0.82 0.68% Europe (EURO) €0.95 0.24% Canada (Canadian Dollar) $1.36 0.58% Japan (Yen) ¥136.55 1.67%   Cryptocurrency Bitcoin and Ether were down slightly during Monday trading hours with declining trading volume. Ethereum has turned inflationary again after activity on the network fell. CRO gained more than 10% after Crypto.com announced that it was launching a series of NFTs with Coca-Cola for the World Cup. Nexo said it plans to stop offering products and services in the U.S. Market Price Move Bitcoin $17,025.90 0.71% Ethereum $1,264.23 -1.34% Litecoin 80.98 4.79% Bitcoin Cash $111.11 1.22%   The trading ideas goes into active money management by the team of Elite CurrenSea (ECS), which you can follow at $0 upfront fees over their website.