CZECHIA: CNB's Frait Sees Limited Scope For Further Rate Cuts
- The board of the Czech National Bank (CNB) holds its regular weekly meeting this morning after Governor Ales Michl told the Financial Times that he would propose looking into investing part (possibly around 5%) of the central bank's hefty reserves into bitcoin. If this plan comes to fruition, the CNB would become the first Western central bank to hold crypto assets as part of its reserves. Michl later clarified that no such decision is imminent, but he will nonetheless put the proposal to discussion. The Bank Board does not normally release any communique from its non-decision meetings.
- CNB Deputy Governor Jan Frait told Reuters that the scope for further rate cuts is limited this year amid persistent inflation risks. The official said that next week the Bank Board will discuss whether to lower rates by 25bp or leave them unchanged, adding that "both are possible." Frait predicted that the key rate could reach 3.5% by the end of this year (from 4.0% currently), if everything goes as planned. Market expectations have shifted towards a 25bp cut next week after Governor Michl told the FT that it was a "very likely" outcome.
- Market participants will be on the lookout for any final rounds of CNB speak until 14:00GMT/15:00CET, when the media blackout ahead of next week's rate decision kicks in.
- The Finance Ministry will release its quarterly macroeconomic forecast at 10:00GMT/11:00CET.
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SILVER TECHS: Bearish Cycle Remains Intact
- RES 4: $34.903 - High Oct 23 and the bull trigger
- RES 3: $33.125 - High Nov 1
- RES 2: $32.338 - High Dec 12 and a key resistance
- RES 1: $30.676 - 50-day EMA
- PRICE: $28.945 @ 07:58 GMT Dec 31
- SUP 1: $28.748 - Low Dec 19
- SUP 2: $28.446 - 76.4% retracement of the Aug 8 - Oct 23 bull cycle
- SUP 3: $27.686 - Low Sep 6
- SUP 4: $26.451 - Low Aug 8
A bear cycle in Silver that started Oct 23 remains in play. The metal has recently breached support at $29.642, the Nov 28 low. The break lower opens $28.446, a Fibonacci retracement. Note that moving average studies are in a bear-mode position highlighting a dominant downtrend. Key resistance has been defined at $32.338, the Dec 12 high. A break of this level would signal a reversal.
USDCAD TECHS: Bullish Flag Formation
- RES 4: 1.4667 2.0% 10-dma envelope
- RES 3: 1.4539 3.382 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 2: 1.4508 3.236 proj of the Oct 17 - Nov 1 - 6 price swing
- RES 1: 1.4467 High Dec 19
- PRICE: 1.4367 @ 07:52 GMT Dec 31
- SUP 1: 1.4336 Low Dec 20
- SUP 2: 1.4277/4103 20- and 50-day EMA values
- SUP 3: 1.4011 Low Dec 5
- SUP 4: 1.3928 Low Nov 25 and a key support
USDCAD bulls remain in the driver’s seat and the pair is holding on to the bulk of its recent gains. The latest pause appears to be a flag formation - a bullish continuation signal. Note too that moving average studies are in a bull-mode position, highlighting a dominant uptrend. Sights are on 1.4508 next, a Fibonacci projection level. Initial firm support to watch lies at 1.42779, the 20-day EMA. A pullback would be considered corrective.
