In the coming week, financial markets will focus primarily on central bank decisions, with the spotlight on the US Federal Reserve. We are slowly beginning to see delayed macro data from the United States, although the key indicators such as CPI inflation and the NFP labor market report will not be released before Wednesday’s Fed decision. Nevertheless, the market is almost certain that the Fed will cut interest rates. Apart from the Fed, next week will also bring decisions from the Swiss National Bank and the Reserve Bank of Australia. Several technology companies, including Broadcom and Oracle, will publish their financial results due to their slightly shifted fiscal calendars. As a result, markets such as GOLD, the US100 index, and the USDCHF currency pair deserve particular attention next week.
GOLD
Gold has gained about 7% from its early November low and remains one of the best performing assets this year, although at the moment it trails behind silver. Gold may respond strongly to the tone of the Federal Reserve’s announcement this Wednesday. The market is pricing in more than a 90% probability of a rate cut, meaning investors will focus heavily on the Fed’s guidance. Another partial rate cut is anticipated for April, while a full cut is fully priced in for June. If the Fed’s communication turns out more dovish, it could open further room for dollar weakness and additional gold strength, especially as capital continues to rotate away from US assets. Aside from Wednesday’s decision, attention should also be paid to Tuesday’s JOLTS report and next Thursday’s weekly jobless claims.
US100
Futures on the Nasdaq 100 have risen more than 7% from the November 21 low and are now less than 3% below all-time highs. For the index, both the Fed decision and upcoming earnings from tech companies with off-cycle fiscal calendars will be important. On Wednesday after the close, Adobe and Oracle will release their results. Oracle, due to its cooperation with OpenAI and Nvidia, has been labeled by some as another speculative bubble. On Thursday after the session, Broadcom will publish its results. The company, known for producing specialized chips, has often been described as extremely overvalued, yet its previous earnings report was very strong.
USDCHF
While the Fed is expected to deliver another rate cut, the Swiss National Bank is not expected to take a similar step, even despite Switzerland’s low inflation problem. As Bloomberg notes, real interest rates in Switzerland remain high, and the lack of SNB intervention in the FX market may create renewed upward pressure on the franc. The Swiss currency has gained nearly 13% against the US dollar this year and is second only to the Swedish krona among G10 currencies. If the SNB remains passive, another attempt to push USDCHF below the 0.80 level cannot be ruled out.
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